Measuring Macro Flashcards
(12 cards)
Inequality
The degree to which people in a population differ in their ability to satisfy their economic needs
Some inequality is necessary to create productivity but inequality has been growing globally
Inequality leads to
Incentive to take risk
Incentive to improve resources
Sources of inequality
Income, Wealth
Education, Health, Nutrition, Gender
Lorenz Curve
Showing the richest 20% Earn 50% of income
Showing the poorest 80% Earn 50% of income
Gini coefficient
Area between line of equality and lorenz curve / entire area under line of equality
Poverty
The inability to satisfy minimum consumption needs, absolute or relative
Wealth and income are interrelated
Absolute poverty
Where individuals do not have access to basic requirements of life
($1.90) poverty line USD
Relative poverty
Where individuals are excluded from being able to attain what is considered the normal, acceptable standard of living in a society
Hidden unemployment
Hidden unemployment are the discouraged workers
Regressive taxes
As income increases the fraction of income paid as taxes decreases ; there is a decreasing tax rate
Proportional taxes
As income increases the fraction of income paid as tax remains constant ; there is a constant tax rate
Progressive taxes
As income increases, the fraction of income paid as a tax increases ; there is an increasing tax rate
