Wealth and its relationship to income

It is important to note that for an individual to build wealth, he needs to earn income. However, the highest income earners are not necessarily the people to build the highest value of wealth. There are other factors which enable people to build wealth.

For example, introduction of hire-purchase schemes by Brothers Motor Company in Male’ enabled most of the people with an average income job to purchase motor cycles. Without the hire-purchase scheme, it would not be possible for most of the people to purchase a motor cycle.

Building wealth also depends on the life style of the individuals. To acquire wealth, the current consumption has to be forgone so wealth can be acquired and higher standard of living can be enjoyed in the future.

Economics is the study of how human beings choose to satisfy their wants with the limited resources available. The choice of whether to consume today and satisfy the wants, or to forgo today’s wants so that more wants can be satisfied in the future, is an important decision an individual can make.

Even at the government level, at macroeconomic level, the decision to increase productive resources, that is, build up wealth, is one of the most significant economic decisions made in an economy.

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