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A-Level Economics Edexcel > 4.2 Poverty & Inequality > Flashcards

4.2 Poverty & Inequality Flashcards

1
Q

What is absolute poverty?

A

A situation where individuals cannot afford to acquire the basic necessities for a healthy & safe existence
- more prevalent in developing countries than developed

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2
Q

What is the world banks 3 main poverty lines?

A

percentage population living on less than:
- >$2.15
- >$3.65
- >$6.85

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3
Q

What can extreme poverty by described as?

A

multidimensional
- much more than living on a very low income per capita

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4
Q

What is the projection of poverty globally?

A
  • global poverty has been falling but starting to increase due to pandemic
  • decreased poverty is a benefit of globalisation
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5
Q

What is the national poverty headcount ration

A

the percentage of the population living below the national poverty lines.
- national estimates are based on population weighted subgroups estimates from household surveys.

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6
Q

What things can be indicators of development?

A
  • increased quality of electricity, water, etc.
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7
Q

What is relative poverty

A

where household income is a certain percentage less than the median household income in this country
- individuals who experience relative poverty may not suffer absolute poverty
- relative poverty is more prevalent when a society has more income inequality

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8
Q

What does the UK define income inequality as

A

below 60% of the median household income

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9
Q

What was the poverty line as an income in the UK in May 2022

A
  • household income was £2072/month
  • this meant that the relative poverty line was any household earning less than £1243.2
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10
Q

What is the composition of UK poverty consist of?

A
  • children
  • children of single parents
  • pensioners
  • low skilled workers/unemployed
    -e.g.3mill living on min wage but depend on inheritance, partners earnings etc
  • disabilities, rely on benefits
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11
Q

Causes of changes to poverty

A
  • unemployment changes
  • change in rate of economic growth
  • economic development
  • fdi
  • policies resulting in trade
  • gov tax/ benefits
  • change in asset prices
  • external factors; war climate illness
  • life expectance
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12
Q

What is income?

A

flow of money into a household

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13
Q

What are examples of income

A
  • rent
  • wages
  • interest
  • profit
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14
Q

What is wealth?

A

stock of assets

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15
Q

Examples of wealth

A

paintings, inheritance, shares

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16
Q

What is the relationship between income and wealth

A

Wealth can lead to income
- savings lead to interest
- share capital to dividends
- ownership of second properties lead to rent
- ownership of business leads to profit

17
Q

What is an acronym that can be used to remember causes of income and wealth inequality in a country?

A

GAS

18
Q

What does gas stand for?

A
  • government policies
  • asset ownership
  • skills
19
Q

What are the government policies that cause inequality?

A
  • tax
  • benefits
  • corruption
  • inheritance tax
  • minimum wage
  • policies towards trade union
20
Q

how does taxation levels cause inequality

A
  • tax tends to be lower for countries with high levels of inequality
  • developing countries have a low figure for tax revenue as a % of GDP
21
Q

How does benefits cause inequality

A
  • social benefits have been cut or not increased with inflation - or in some countries do not exist
  • this will cause greater inequality
22
Q

How is asset ownership a cause of inequality

A
  • generates income
  • lack of developed financial markets prevents individuals borrowing to acquire land/ assets.
  • so assets tend to be handed down through family or acquired by corrupt governments
23
Q

How are a lack of skills a cause of inequality

A

lack of skills causes a decrease in the level of income due to lack of skills/ training
- a country with a poor education system will see greater inequality than one with a good education system

24
Q

How do wage rates cause income inequality

A
  • min wage is there to improve the equity distribution of income.
  • without it, more households would be earning less and inequality would increase
25
Q

What is Simon Kuznetsk hypothesis

A

how income inequality changed as an economy goes through stages of industrialisation and development

26
Q

Why did industrialisation increase inequality

A

some workers moved from lower productivity, lower paid agricultural sector to the higher productivity manufacturing sector
- causing greater income inequality with the workers left behind

27
Q

What happens to inequality after this decreases

A

due to government intervention, funded by increased state tax revenue brought about as a result of the increased production in the economy

28
Q

What does the Kuznetsk curve look like

A
  • a quadratic
  • developing economies on + gradient of slope
  • developed economies on - gradient of slope
  • income inequality on y-axis
  • per capita income
29
Q

An analysis of the kuzneys curve

A
  • as a country changes from primary to secondary, productivity increases and per capita income increases
  • however inequality is also increasing as the gain wages between the two sectors is significant
  • at some point, the economy will reach a Turing point of income where inequality begins to fall
30
Q

what is capitalism?

A

an economic system based on private ownership.

31
Q

How does inequality occur under capatalism

A

under capitalism workers with higher skill and higher MRP earn higher wages
- having less skill causes little to no wage to be received creating inequality
- the higher income can acquire more assets leading to higher levels of inform

32
Q

How is the extenet of inequality under capitalism determined

A

inequality under capitalism is a form of market failure
- this can be reduced by government policy
- inequality before tax and benefits or laws against the inequality after
- the impact of it overall with the government intervention policies.

A-Level Economics Edexcel (20 decks)

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