Poverty, Inequality

Question 1

Absolute poverty

Answer 1

Indi/HH are deprived of basic human needs

Question 2

Relative poverty

Answer 2

Indi/HH are poor in comparison to the rest of the popu

60% of median hh income

Question 3

Tax avoidance/evasion, which one is legal?

Answer 3

Tax avoidance

Question 4

Income & wealth, which is a stock concept and which is a flow concept? Give eg’s.

Answer 4

Wealth is measured at a pt in time. Assets: house, shares.

Income is measured over a period of t.
E.g. Income over a year.

Wealth generate income

Question 5

horizontal equity

Answer 5

Identical treatment of identicals

Question 6

Vertical equity

Answer 6

Different treatment of dissimilars

Question 7

Poverty trap

Answer 7

when people have little or no incentive to get a better paid job or work longer hours. (not to be confused with unemployment trap where there is no incentive to get a job at all.)

Question 8

progressive tax

Answer 8

Eg income tax

As income increases a higher % of income is paid in tax

Question 9

Regressive tax

Answer 9

As income rises a smaller % a smaller percentage of income is paid in tax