Chapter 33: Poverty Flashcards
Absolute poverty
Where people’s income is too low to enable them to meet their basic needs
Relative poverty
Where people are poor in comparison to others in the country. Their income is too low to enable them to enjoy the average standard of living in their country.
The vicious cycle of poverty
- Likely to have worse education and healthcare
- Reduce productivity
- Reduced employment opportunities and income
- Affect prospects of students
Government policies to reduce poverty
Improving quantity or quality of education
Increases job prospects and earning potential of the poor and their children
Government policies to reduce poverty
Promoting economic growth
Increasing government expenditure, reducing the rate of interest increases demand creating output and more jobs.
Unemployment lowers the living standards for others too because of low output
Government policies to reduce poverty
Introducing or raising the minimum wage
designed to tackle the problem of people experiencing low living standards due to low wages
Government policies to reduce poverty
Encouraging more multinational companies to set up in the country
Opening up of new firms in the country should create more employment opportunities
Government policies to reduce poverty
Providing benefits or more generous state benefits
Giving benefits, or raising the benefits they receive, may enable sick and elderly to avoid absolute poverty
If there is a lack of jobs, it may help in the short run by raising living standards but may also reduce unemployment by increasing demand
However, if jobs are available, and the unemployed are not filling them because they receive a higher income on benefits, raising benefits will reduce the incentive to work.
Government policies to reduce poverty
Land reforms
- Making ownership of land more equal may increase output and living standards
Measures to raise living standards
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