poverty and inequality

Question 1

absolute poverty

Answer 1

minimum amount of resources a person needs to survive

Question 2

relative poverty

Answer 2

comparison with people in a country and will vary between countries. people are considered to be in relative poverty if they are living below a certain income threshold in a particular country

Question 3

measures of relative poverty

Answer 3

a line is set, which is a percentage of average income. commonly ranging between 40% and 70% of household income.

Question 4

problems with the concept of relative poverty

Answer 4

subjective, changes over time, cant be easily used to make international comparisons

Question 5

measure of poverty: the united nations human poverty index

Answer 5

HPI-1 measure of deprivation in the poorest countries of the world, HPI-2 more relevant to developed countries. both these combine components such as life expectancy, literacy rate, employment etc.

Question 6

measure of poverty: ratio method

Answer 6

the proportion of income spent on basic necessities such as food

Question 7

causes of changes in poverty

Answer 7

health, education, level of unemployment, level of indebtedness, access to public services, state of economy etc.

Question 8

income

Answer 8

flow concept, i.e. the money earned by a person over a period of time.

Question 9

wealth

Answer 9

the stock of assets someone owns

Question 10

measures of income inequality: the Lorenz curve

Answer 10

plots the cumulative percentage of the population against the cumulative percentage of total income. graphical representation of income distribution.

Question 11

measures of income inequality: Gini coefficient

Answer 11

numerical calculation (A divided by A+B) of inequality based on the Lorenz curve with a value of zero being perfect equality and a value of being perfect inequality. can also be expressed as a percentage

Question 12

causes of wealth and income inequality within countries

Answer 12

education, wage, strength of trade unions, degree of employment protection, progressiveness of the tax system

Question 13

causes of wealth and income inequality between countries

Answer 13

natural resources, geography, history, political stability, technological change, amount of FDI

Question 14

impact of economic change and development on inequality

Answer 14

when economy in early stage of development and more agriculturally based, there is low levels of income inequality, industrialisation increases inequality, but eventually decreases it.

Question 15

significance of capitalism for inequality

Answer 15

the split between the owner of resources required for producing and distributing goods, and the workers, who sell their labour to the owners in exchange for wages. typically, the owner has more wealth, so contributing to inequality.