Distribution of Income and Wealth (HSC SSCE Economics): Flashcards
📚Flashcards
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Practise the cards
10 cards from this deck
Marginal productivity
Marginal productivity
Individual's contribution to output
Diminishing marginal utility
Diminishing marginal utility
Each extra unit gives less satisfaction
Marginal propensity to consume (MPC)
Marginal propensity to consume (MPC)
Proportion of extra income spent, not saved
Conspicuous consumption
Conspicuous consumption
Spending to display wealth/status (e.g., yachts, jets)
Relative poverty vs absolute poverty
Relative poverty vs absolute poverty
Relative: poor vs others; Absolute: can't afford basics
OECD study finding on inequality & growth (1985-2005)
OECD study finding on inequality & growth (1985-2005)
Inequality reduced cumulative growth by 4.7% over 1990-2010
Labour mobility benefit from inequality
Labour mobility benefit from inequality
Workers move to where labour is most needed/valuable
How inequality encourages entrepreneurship
How inequality encourages entrepreneurship
High income prospect motivates risk-taking in business
Poverty cycle (self-perpetuating)
Poverty cycle (self-perpetuating)
Poor children lack education, can't escape poverty as adults
Inequality of opportunity: inheritance factor
Inequality of opportunity: inheritance factor
Inherited wealth creates unequal starting points for wealth