All Flashcards
What is the impact of progressive taxation on income inequality?
Progressive taxation tends to reduce income inequality by redistributing income from higher earners to lower earners.
What is the impact of regressive taxation on income inequality?
Regressive taxation tends to increase income inequality by disproportionately burdening lower-income earners.
How do government subsidies for education affect income inequality?
They can reduce income inequality by providing opportunities for low-income individuals to acquire skills and increase their earning potential.
What is the impact of minimum wage laws on income inequality?
Minimum wage laws can reduce income inequality by increasing the earnings of low-wage workers, but may also lead to job losses.
What is the impact of rent control policies on income inequality?
Rent control can benefit existing tenants, but may reduce the supply of affordable housing and potentially worsen income inequality in the long run.
How does investment in early childhood education affect income inequality?
It can reduce income inequality by providing disadvantaged children with a strong foundation for future success, improving their educational and economic outcomes.
What effect do unemployment benefits have on income inequality?
Unemployment benefits provide a safety net for those who lose their jobs, reducing the severity of income shocks and lessening income inequality during economic downturns.
How do policies promoting access to healthcare affect income inequality?
They can reduce income inequality by ensuring that low-income individuals have access to necessary medical care, improving their health and productivity.
What is the impact of deregulation on income inequality?
Deregulation can lead to increased competition and economic growth, but may also exacerbate income inequality if it results in lower wages and reduced worker protections.
How do policies that encourage entrepreneurship affect income inequality?
They can create opportunities for individuals to start their own businesses and increase their income, but may also lead to greater income disparities if some entrepreneurs are more successful than others.
What is Income Inequality?
How annual earnings are distributed among a population.
What is Wealth Inequality?
How assets are distributed among a population.
What is the Lorenz Curve?
A visual representation of income inequality, plotting cumulative income percentage against cumulative population percentage.
What is the Gini Coefficient?
A numerical measure of income inequality, ranging from 0 (perfect equality) to 1 (perfect inequality).
What is a Progressive Tax?
A tax that takes a larger percentage of income from high-income groups.
What is a Regressive Tax?
A tax that takes a larger percentage of income from low-income groups.
What is a Proportional Tax?
A tax that takes the same percentage of income from all income groups.
Define Transfer Payments.
Government payments to individuals or businesses designed to meet a specific objective rather than pay for goods or resources.
What is 'perfect equality' in the context of the Lorenz curve?
A state where everyone has the same income, represented by a straight diagonal line on the Lorenz curve.
What does a Gini Coefficient of 0 indicate?
Perfect income equality.
On a Lorenz curve, what does a curve closer to the line of perfect equality indicate?
A more equal distribution of income.
On a Lorenz curve, what does a curve further away from the line of perfect equality indicate?
A less equal distribution of income.
How does a progressive tax system shift the Lorenz Curve?
It shifts the Lorenz Curve closer to the line of perfect equality.
How does a regressive tax system shift the Lorenz Curve?
It shifts the Lorenz Curve further away from the line of perfect equality.
If Area A (area between the line of perfect equality and the Lorenz curve) increases, what happens to the Gini coefficient?
The Gini Coefficient increases, indicating greater income inequality.
If the Lorenz curve perfectly overlaps the line of perfect equality, what is the Gini coefficient?
The Gini coefficient is 0.
What does the x-axis of the Lorenz Curve represent?
Cumulative percentage of the population.
What does the y-axis of the Lorenz Curve represent?
Cumulative percentage of income.
How would a significant increase in inheritance taxes affect the Lorenz curve?
The Lorenz curve would likely shift closer to the line of perfect equality, as wealth is redistributed.
How would a decrease in social mobility affect the Lorenz curve?
The Lorenz curve would likely shift further away from the line of perfect equality, as income becomes more concentrated.