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Flashcards in chapter 14 Deck (9)
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1
Q

functional distribution of income

A
  • distribution of national income among major factors of production: labour, capital, land
2
Q

size distribution of income

A

distribution of income among individuals, without regards to source of income

3
Q

lorenz curve

A
  • graph showing extent of inequality of income distribution - size of area between lorenz curve and diagonal is measure of inequality
4
Q

complete inequality

A
  • lorenz curve would coincide with diagonal line
5
Q

gini coefficient

A
  • the ratio of the area between the line of perfect equality and the line of perfect inequality
  • the higher the coefficient, the more unequal the distribution is
6
Q

trends in income distribution

A
  • since 1980s, have seen an increase in income inequality

- top earners have earned more

7
Q

why should we care about rising income inequality

A
  • raises a moral question about fairness

- inequality is hurting the economy

8
Q

causes of rising inequality

A
  • skill based technological change
  • globalization
  • other: decline of labour unions, contract work, executive compensation, superstar theory, piketty argument
9
Q

what can governments do

A
  • increase taxes on high income individuals

- provide services for children from different backgrounds so they have more equal access