3 explain how wealth is measured how does wealth

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3. Explain how wealth is measured. How does wealth differ from net worth? a. Wealth is measured by subtracting liabilities minus assets. Wealth and net worth are measured the same way and are essentially synonymous. 4. Classify assets as a financial planner would, using the categories financial assets, investment assets, and use assets. What types of assets would go into each category? Now explain how and why Dr. Wolff made changes to this classification when he conducted research on wealth distribution trends in in the US. a. Tangible Assets- assets that have physical form; ex. land, car, furniture b. Financial Assets- desires value because of an agreed contract; ex. stocks, bonds, CDs, bank deposits 5. Describe the key differences Dr. Wolff found in the assets and liabilities held between the “super rich” and “everyone else” and between “middle income families,” “the rich,” and “the super rich.” a. Assets of wealthy: i. Bank accounts earning interest ii. Real estate earning income iii. Stocks/bonds b. Assets of nonwealthy: i. Furniture ii. Lottery tickets iii. Consumables c. Liabilities of nonwealthy: i. Mortgage ii. Car loan 6. Describe the trends in wealth distribution in the US – who’s gaining, who’s losing and why?
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a. The distribution of wealth in the United States is profoundly unequal. The wealthiest 1% of all households controls a much larger share of national wealth (35.4%) than the entire bottom 90% of households (23.3%). The “super rich” are the ones gaining and the bottom 90% are the ones losing. 7. Define the terms standard and level of consumption and living. Use these terms to evaluate current levels of consumption, debt, and wealth in the United States. a. Standard- level that people strive to achieve b. Level- that which is actually experienced, enjoyed, or suffered c. Consumption- commodities- their uses and services 8. List and critique the reasons given for wealth inequality in the US. a. CEOS and top managers earning much bigger incomes b. Large savings allow for more money to be accumulated c. Lower cost of credit and high rewards 9. Evaluate conservative and liberal arguments regarding why and how the wealth distribution should be changed. a. Conservative: i. Believe the wealthy earned their money and should be allowed to keep all of it ii. Believe the individual should be responsible for supporting themselves w/o help from the government iii. Believe government programs cause people to become reliant and lazy iv. Lower taxes provide people incentive to work, save, and invest v. Less government intervention b. Liberal: i. Believe everyone should be economically equal in society ii. Believe in government action to achieve opportunity and equality iii. Believe government programs are a caring way to help the poor and needy iv. Higher taxes v. Taxes allow government to provide jobs and welfare vi. More government intervention 10. Evaluate the role that a capitalistic market economy has on the ability to acquire wealth.
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