1c. Income and wealth

Income and wealth

Income – A flow concept – the amount of earnings during a period

Wealth – A stock of assets e.g. property and shares

The importance of income and income

High real incomes mean consumers and households have more disposable income. It is also likely an indicator of success for firms and general economic growth

If individuals and households feel wealthier this breeds confidence and means they are more
likely to spend. This is good for economic growth and could have a knock on effect to incomes

In the UK most peoples wealth is related to house prices and is why it is so widely reported on

If house prices are rising people feel wealthier and are more likely to spend – especially on ‘big
ticket’ items