Income and its distribution

DISCUSSION 1. What is income?

2. Do you know the difference between income and profit?

3. What types of income do you know?

READING INCOME

The second of the three economic issues is the question of income, that is, income distribution, the way in which income - that's what people earn - is distributed or shared around.

You, and your family, have an income. You have an annual income, that is what you earn in a year. This income allows you to enjoy various goods and services. It means you have a certain standard of living. Your standard of living, of course, includes what you think of as necessary to your life, things like food, water, somewhere to live, health and education. But your income doesn't just cover the necessities of life. It also includes recreation, whether that's sport or TV or a holiday. Your income will be less than some of your neighbours', but it will be more than some of your other neigh­bours'. Your neighbours mean not just people living in your own country, but also people living in other countries.

Just as you and your family have an income, so nations, different coun­tries, also have an income - the national income, it's often called. A national income is not the money the government gets. The national income is the sum total of the incomes of all the people living in that coun­try, in other words, everyone's income added together. In the same way one can think of world income as the total of all the incomes earned by all the people in the world.

Concerning the distribution of national and world income, some ques­tions are to be asked: who, in the world, gets what share of these incomes? The distribution of income, either in the world or in a country, tells us how

PART I. ECONOMICS

income is divided between different groups or individuals. Table 1 in exer­cise II shows the distribution of world income. There are three headings down the left-hand side of the table: income per head, percentage of world population and percentage of world income. In poor countries, like India, China and the Sudan, the income per head is only one hundred and fifty-five pounds per year. But at the same time, they have fifty point seven per cent of the world's population. These poor countries only have five per cent of the world's income.

In middle-income countries the income per head is eight hundred and forty pounds, that's in countries like Thailand and Brazil. In the major oil countries, like Kuwait and Saudi Arabia, it's seven thousand, six hundred and seventy. In industrial countries it's six thousand, two hundred and seventy.

Turning to middle-income countries again, they have twenty-five point one per cent of world population, with fourteen point two per cent of world income. The major oil countries have point four per cent of popula­tion, the industrial countries fifteen point six. The oil countries have one point five per cent of world income, the industrial countries sixty-four point eight.

The first economic question is for whom does the world economy pro­duce? As the table shows, it produces essentially for the people living in the rich industrial countries. They get sixty per cent of the world's income, although they only have sixteen per cent of its population. This suggests an answer to the second question, that is of what is produced. The answer is that most of world production will be directed towards the goods and serv­ices that these same rich industrialized countries want.

The third question is how goods are produced. In poor countries, with little machinery, not very much technical training and so on, workers pro­duce much less than workers in rich countries. And poverty is very difficult to escape. It continues on and on. And this goes some way towards accounting for the differences in national incomes. It accounts for an une­qual distribution of income, not just between countries but also between members of the same country, although there individual governments can help through taxation. In other words, governments can act to help distrib­ute income throughout their population.

. 3CABULARY income distribution - розподіл доходу

NOTES annual income - річний дохід

a certain standard of living - певний

рівень життя

to cover the necessities of life -

охоплювати основні життєві потреби

recreation - відпочинок

national income - національний дохід

share of income - частка доходу

income per head - дохід на душу

населення

percentage of world population - процент

світового населення

percentage of world income - процент

світового доходу

essentially - в основному

world production - світове виробництво

rich industrialised countries - багаті

промислові країни

not very much technical training -

недостатнє технічне навчання

to escape - тут уникати

to account for (syn. to explain) -

пояснювати

the differences in national incomes -

відмінності в національних доходах

unequal distribution of income - нерівний

розподіл доходу

throughout population - серед населення

UNIT 6. INCOME AND ITS DISTRIBUTION

EXERCISES I. Suggest the Ukrainian equivalents:

income is shared around; income doesn't just cover the necessities of life; to suggest an answer to the question; to direct the production towards the goods and services; individual governments

II. Fill in the table with the data from the text. Table 1. The Distribution of World Income

	Poor countries	Middle-income countries	Major oil countries	Industrial countries
Income per head
% of world population
% of world income

III. Answer the following questions:

1. What countries are called poor?

2. For whom and what does economy produce?

3. What is the role of governments in distributing incomes?

IV Fill in the gaps with the words and expressions from the text.
1. You have___, that is what you earn in a year.

Your income doesn't just____ the necessities of life.

It includes___, whether that's sport or TV or a holiday.

__ is the sum total of the incomes of all the people living in that country.

__ is the total of all the incomes earned by all the people in the world.

In poor countries____ is only one hundred and fifty-five pounds per year.

In___ countries the income per head is eight hundred and forty pounds.

Most of world production____ towards the goods and services that these same rich

industrialised countries want.

9.

In poor countries, with____, not very much technical training workers produce much

less than workers in rich countries.
10. This goes some way towards____ the differences in national incomes.

V Find English equivalents and write 5 sentences of your own:

розподіл доходів; щорічний дохід; певний рівень життя; національний дохід; світовий дохід; дохід на душу населення; країни зі середнім рівнем доходу; нерівний розподіл доходів; уникнути бідності.

VI. Give the definitions of:

• income distribution

• national income

VII. Numbers. How would you say these numbers? Write them in words.

1.	12,402
2.	1,001,111
3.
4.	.15
5.	.002
6.	1/4
	1/2

8. 1/3

What are these numbers in figures? Write them.

9. one million seven hundred and fifty-four thousand three hundred and twenty-one

?S

PART I. ECONOMICS

10. one billion

11. ninety-two

12. three thousand four hundred and two

13. one hundred and ninety-nine point nine recurring

14. point nought two

15. one point eight

What is the answer to these sums? Write the sums and the answers in figures. Note: K = 1000; m = million

16. twelve times eight

17. thirty eight times two

18. one hundred and forty four divided by twelve

19. five divided into one hundred

20. eight times fifty K

21. three times one point five m.

VIII. Express your attitude towards the following proverbs and sayings.

• All things are difficult before they are easy.

• Grasp all, lose all.

• No bees, no honey; no work, no money.

• No great loss without some small gain.

• No pains, no gains.

UNIT 6. INCOME AND ITS DISTRIBUTION

Дата добавления: 2014-12-23