Final answer:
Money is a stock and income is a flow. Income refers to the flow of money earned over a certain period, while money or wealth is the accumulated assets minus debts. They are key indicators in assessing financial status.
Step-by-step explanation:
The difference between money and income can be explained by understanding that money is a stock and income is a flow. Money refers to the actual currency that one holds at a given time, such as cash in hand or in a bank account. Income, on the other hand, is the flow of money received within a particular period, usually measured on a monthly or annual basis through wages, salaries, commissions, tips, dividends, and interest from financial assets.
When we look at income inequality, we consider the differences in the flow of income that people receive over time. Wealth inequality examines the disparity in the total accumulation of assets minus debts among individuals or households. A retired person, for instance, may have a modest income consisting primarily of a pension or Social Security, yet they might possess considerable wealth from years of saving and investing.
Determining economic status requires looking at both income and wealth, as both are crucial indicators in measuring an individual's or family's financial health.