Book: Yu. Mamedov. Modern economics. Page 3

The desire for income equality, which, in the opinion of many, symbolizes social justice, is always accompanied by a drop in economic efficiency, because there is no need for either the poor (society will support it anyway) or the rich (society will take it away anyway) to work effectively. The choice between equality and income inequality becomes a choice between social

The minimum wage must ensure the standard of well-being established in society.

Inflation becomes a factor in the redistribution of income, increasing property differentiation. This injustice is overcome by indexing a fixed nominal income.

Saving is the future demand for future goods and services. That is why the souls of the government, economists and businessmen are always warmed by messages about an increase in savings - it means that the population believes in the stability of the national currency, it means that inflation has not become a factor determining the size of consumer demand, which means it is profitable to save.

The savings rate is the percentage of savings in the overall structure of personal income. The level of the savings rate characterizes the level of economic development of the country: the greater the share of income allocated to savings, the higher this level.

In economic theory, the quality of life of the population is usually assessed by the share of consumer spending on the purchase of essential food and industrial goods: the lower the share of these expenses, the higher the quality of life.

Nominal income is the amount of money at the personal disposal of the recipient. Real income is the amount of goods and services that can be purchased with a given nominal income. A decrease in income may be the starting point of a crisis. Therefore, maintaining a market-efficient level of income is one of the main tasks of regulating a market economy.

The share of food expenses in the structure of personal income is an objective indicator of the standard of living in a given country: the lower these expenses, the higher the level of well-being.

Full consumer use of income would mean its equality with expenses. However, in reality, an increase in the amount of income is accompanied by a rapid increase in its saved part.

The desire for maximum benefit can incline the income recipient to increase consumer spending (in conditions of galloping inflation), or it can - subject to high interest rates - force him to give up part of consumer spending, inclining him to increase the saved part of expenses.

If the distribution of low incomes is subject to sharp and sometimes unpredictable fluctuations, then when it reaches a higher level it becomes stable. Social stability is a consequence of the high level of well-being of the population.

The interaction of supply and demand is an objective mechanism for generating income in a market economy. Of course, there are elements of randomness and therefore unfairness in such a mechanism, but there is no other way to generate income in a market economy.

The direct dependence of income on the results of market activity is violated only in one case - when it is objectively impossible to participate in it (pensioners, young people of working age, disabled people, dependents, the unemployed). These categories of the population are supported by the entire society, on behalf of which the government regularly pays cash benefits.

Income is always represented by money. This means that the condition for receiving it is effective participation in the economic life of society: whether we live on a salary or through our own entrepreneurial activities, in any case we must do something useful for other people.