3.6.3 The impact of inequality on economic agents
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How can inequality affect individuals
It can discourage low-income individuals from participating in society
How can inequality affect productivity
Low income is linked to lower education and skills
How can inequality motivate workers
Higher wages reward productivity and encourage skill development
How do monopolies increase inequality
They charge higher prices and pay lower wages to increase profits
How does inheritance contribute to inequality
Wealth is passed down giving better access to education and jobs
Why does wealth increase inequality over time
Wealth generates more income for the rich
How can governments reduce inequality
Through inheritance tax
How can inequality create negative externalities
It can cause social unrest and disengagement
How can inequality reduce productivity
Low-income workers may lack incentives to be productive
How can inequality lead to market failure
Some consumers cannot afford goods
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Flashcards (25)