3.7.1 The distribution of income and wealth

• Examples of income include wages, salaries, interest, dividends, and government benefits
• The Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality
• What is the approximate Gini coefficient for income inequality in the UK, according to the study material?

  0.35-0.40
• What is the definition of wealth according to the study material?

  Total value of assets owned
• Wealth is measured periodically, like income.

  False
• How does income distribution in the UK compare to other developed countries, according to the study material?

  Relatively high inequality
• The Wealth Gini coefficient in the UK is approximately 0.60-0.65
• Wealth in the UK is highly skewed
• What is the Income Gini coefficient in the UK?

  0.35-0.40
• What is the definition of income?

  Flow of money
• Income inequality in the UK is measured using the Gini coefficient.


  True
• What is the range of the Gini coefficient?

  0 to 1
• What is the impact of education and skills on income inequality?

  Determines job opportunities
• Income inequality and wealth inequality have distinct causes
• Technology and globalization shift employment towards high-skilled, high-wage jobs
• What are the consequences of increased poverty and reduced social mobility due to inequality?

  Higher poverty rates
• How does progressive taxation address income inequality?

  Higher tax rates for higher incomes
• Inheritance tax helps prevent the concentration of wealth across generations.

  True
• What is the primary impact of welfare programs on wealth distribution?

  Limited impact on wealth distribution
• Inheritance tax reduces intergenerational wealth transfers.


  True
• What is the definition of income according to the study material?

  Flow of money received over time
• How is income measured, according to the study material?

  Measured periodically
• The Lorenz curve plots the cumulative percentage of income against the cumulative percentage of population.

  True
• What is the Gini coefficient for the North East region in the UK, according to the study material?

  0.38
• Wealth refers to the total value of assets owned by an individual or household.


  True
• Examples of wealth include savings, investments, property, and other valuable possessions
• Order the regions by their average household income, from highest to lowest, according to the study material.

  1️⃣ London (£60,000)

  2️⃣ South East (£55,000)

  3️⃣ North East (£45,000)
• Wealth inequality in the UK is higher than income inequality.


  True
• What factors contribute to wealth inequality in the UK, according to the study material?

  Inheritance, asset ownership
• What is the Wealth Gini coefficient in the UK?

  0.60-0.65
• The government uses inheritance tax to address wealth inequality.


  True
• Match the distribution aspect with its characteristic in the UK:

  Income Gini Coefficient ↔️ Around 0.35-0.40

  Wealth Gini Coefficient ↔️ Around 0.60-0.65

  Income Distribution Skew ↔️ Less skewed

  Wealth Distribution Skew ↔️ Highly skewed
• Wealth represents the total value of assets
• The Wealth Gini coefficient in the UK is around 0.60-0.65
• Wealth distribution in the UK is less concentrated than income distribution.

  False
• What does a higher Gini coefficient for wealth compared to income indicate?

  Greater inequality in wealth
• How does education and skills impact income inequality?

  Determines job opportunities and wages
• Inequality can slow economic growth by reducing aggregate demand.


  True
• Match the income group with its impact due to inequality:

  High Income ↔️ May benefit but face social consequences

  Low Income ↔️ Suffers from reduced opportunities
• Welfare programs, such as universal credit, help boost the incomes of low-income households