4.2 - Poverty and inequality

Question 1

Define absolute poverty

Answer 1

• A situation where individuals have insufficient resources to acquire the basic necessitates for healthy and safe living. This includes, shelter, food, clothing, education etc.
• It’s more prevalent in developing countries than developed.

Question 2

Define relative poverty

Answer 2

• A situation where household income is 60% less than the average household income in an economy.
• It’s the main form of poverty that occurs in developed countries.

Question 3

Give examples in the UK of relative poverty

Answer 3

• One in 5 people in the UK live below the official poverty line, with 14m people in relative poverty.
• In 2023, the income gap between Londoners and rest of UK hits record high. This was measured as the average gross disposable income in the capital as 43% higher than the national average.

Question 4

Define the poverty line

Answer 4

The minimum level of income deemed necessary to achieve an adequate standard of living in a given country.

Question 5

State the correlation between absolute poverty and economic growth and the assumption

Answer 5

There’s a strong correlation between GDP and absolute poverty. Economic growth increases household incomes which causes a fall in absolute poverty. This is assuming that the state provides support to those who are unable to benefit from a growing economy.

Question 6

State the two main causes of growth of relative poverty

Answer 6

• Those on higher salaries seeing larger income growth than those on lower salaries (increase in income inequality gap).
• Changes in government spending and taxation