Explain the difference between wealth and income, including what they are, how they are primarily used, and how wealth and income inequalities have changed over time.

Question

What will be an ideal response?

Answer 1

Ans: Income: the amount of money a person or household earns in a given period of time; derived from job salary, investments, social security, and disability; goes toward food, clothing, shelter, health care, and other costs of daily living. Income has stagnated and even decreased compared with earlier decades, and inequality has risen. Wealth: the value of everything a person owns, minus the value of everything she or he owes. Includes home equity and illiquid assets logistically difficult to transform into cash. Net financial assets: measure of wealth that excludes illiquid personal assets such as home and car. Stocks, bonds, cash, and other forms of investment assets. Built up over a lifetime and passed down over generations. Used to create new opportunities rather than just routine expenditures. Buys a high-quality education, business ventures, access to travel and leisure, financial security, and creation of new wealth. Has become increasingly concentrated into the hands of fewer and fewer people; inequality has increased.
KEY: Learning Objective: 7.2: Describe components of social class, including income, wealth, occupation, status, and political voice.
REF: Cognitive Domain: Analysis