What is Wealth? - Definition, Sources & Distribution

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  • 0:01 Definition of Wealth
  • 1:00 Sources of Individual Wealth
  • 3:08 Wealth Distribution
  • 3:47 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Wealth - most of us want it, but what exactly is it? In this lesson, you'll learn what wealth is from an economic perspective and learn how it is measured. You'll also have a chance to take a short quiz to reinforce your knowledge.

Definition of Wealth

Wealth, in its simplest terms, is the value of all the resources that are possessed by an individual or society. In other words, someone's wealth is determined by the aggregate value of everything the person owns that can be exchanged for money, goods or services. Individuals and countries measure wealth differently.

Gross domestic product (GDP) is the measure countries usually use to measure their wealth. GDP is a measure of economic output, which is the value of all the goods and services that an economy produces in a specific period of time. The more a country produces, the wealthier it is from a purely economic standpoint.

Individual wealth is usually measured as net worth, which is the value of your aggregate assets after subtracting the value of all your aggregate liabilities. If the value of your assets exceeds the value of your liabilities, you have a positive net worth. We'll focus on individual wealth for the rest of the lesson.

Sources of Individual Wealth

Sources of individual wealth have evolved through time; many historical sources of wealth remain and more sources of wealth are discovered or created. Let's take a look at some major sources of wealth in contemporary society:

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