ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Wealth measures the assets of a family-their savings, real estate, businesses-and subtracts their debt. It’s arguably more important than individual income because wealth gets passed on from one generation to the next, determining a person’s starting line.

Detailed explanation-2: -Wealth is a stock variable, as opposed to a flow variable like income. Wealth measures the amount of valuable economic goods accumulated at a given point in time; income measures the amount of money (or goods) obtained over a given interval of time.

Detailed explanation-3: -Personal wealth means a stock of valuable possessions: anything from cash under your mattress, through shares and bonds, to the value of your house or your car. Income, on the other hand, is a flow of money you receive, such as wages for employment.

Detailed explanation-4: -First coined by economist John Maynard Keynes, the money illusion states that the average person tends to view their wealth and income in nominal terms instead of real terms.