4.2 Poverty and inequality

Question 1

What is absolute poverty

Answer 1

The person is unable to meet their basic needs

Question 2

What is relative poverty

Answer 2

Less than 60% of the average income in the country

Question 3

Difference between progressive and regressive taxation

Answer 3

Progessive tax is getting taxed more the more money you make- this decreases inequality.
Regressive tax is a tax that is uniform no matter how much money you have this increases ineqaulity.

Question 4

Benefits of unequal income distribution

Answer 4

1. Poor benefit from wealthy peoples money that trickles down
2. Motivation for poor people to improve their current living

Question 5

Drawbacks of unequal income distribution

Answer 5

1. Increase in poverty
2. Poverty increase = crime increase
   3.Worsens balance if trade ad increase in imcome= increase in imports

Question 6

Effects of progessive tax

Answer 6

1.Discourage people to work harded and earn more - poverty trap
2.Decreases inequality

Question 7

What is the poverty trap?

Answer 7

When moving up a tax bracket doesnt have a benefit for the money you make compaired to the extra work you do

Question 8

Effects of minium wage

Answer 8

1. Increases unemployment
2. Better for people in cheaper areas as they make more momeny
3. Better equality
4. Incentivises people to work