Capitalism describes when factors of production such as capital are privately owned and workers are paid wages by the owners of the capital.

A free market occurs when the price mechanism determines the allocation of resources without any government intervention.

True or False? A free market distributes income and wealth equally across society.

False. A free market can lead to an unequal distribution of income and wealth.

Define household income .

Household income is the income of individuals, acquired in the form of wages and salaries, rent, interest and profit .

Define national income .

National income is the income of the whole economy.

What are the two ways capitalism can cause inequality?

Capitalism causes inequality through inheritance and unequal access to capital .

In what four forms can household income be acquired?

Household income can be acquired as wages and salaries, rent, interest and profit .

What does the circular flow of income help us understand?

It helps us understand how income is generated, distributed and spent in an economy.

Over time, the accumulation of wealth through can lead to further income inequality.

Over time, the accumulation of wealth through investment can lead to further income inequality.

Why do higher-skilled occupations contribute to income inequality?

Higher-skilled jobs tend to command higher wages , leading to income disparities between different occupations.

What are four ways governments can reduce income inequality?

Governments can use progressive taxation , minimum wage policies , education and skills development , and labour market regulations .

Governments can invest in education and skills development to enhance and improve income opportunities.

Governments can invest in education and skills development to enhance human capital and improve income opportunities.

True or False? Minimum wage policies help to reduce income inequality.

True. By ensuring workers earn a certain minimum income level , fairer wages are paid and income inequality is reduced.

IBEconomicsDPHLFlashcards2. Microeconomics2.12 The Market’s Inability to Achieve Equity

2.12 The Market’s Inability to Achieve Equity (DP IB Economics: HL): Flashcards

1/13

0Still learning

Know0

FrontMarkets Cause Inequality
Define capitalism.

Was this flashcard helpful?

Cards in this collection (13)

Define capitalism.
Capitalism describes when factors of production such as capital are privately owned and workers are paid wages by the owners of the capital.
Define free market.
A free market occurs when the price mechanism determines the allocation of resources without any government intervention.
True or False?
A free market distributes income and wealth equally across society.
False.
A free market can lead to an unequal distribution of income and wealth.
Define household income.
Household income is the income of individuals, acquired in the form of wages and salaries, rent, interest and profit.
Define national income.
National income is the income of the whole economy.
What are the two ways capitalism can cause inequality?
Capitalism causes inequality through inheritance and unequal access to capital.
In what four forms can household income be acquired?
Household income can be acquired as wages and salaries, rent, interest and profit.
What does the circular flow of income help us understand?
It helps us understand how income is generated, distributed and spent in an economy.
Over time, the accumulation of wealth through can lead to further income inequality.
Over time, the accumulation of wealth through investment can lead to further income inequality.
Why do higher-skilled occupations contribute to income inequality?
Higher-skilled jobs tend to command higher wages, leading to income disparities between different occupations.
What are four ways governments can reduce income inequality?
Governments can use progressive taxation, minimum wage policies, education and skills development, and labour market regulations.
Governments can invest in education and skills development to enhance and improve income opportunities.
Governments can invest in education and skills development to enhance human capital and improve income opportunities.
True or False?
Minimum wage policies help to reduce income inequality.
True.
By ensuring workers earn a certain minimum income level, fairer wages are paid and income inequality is reduced.

Sign up to unlock flashcards

By signing up you agree to our Terms and Privacy Policy

Previous:2.11 Market Failure: Market PowerNext:3.1 Measuring Economic Activity