Poverty

Question 1

Causes of changes in absolute and relative poverty

Answer 1

• Inequality in wages and unemployment - affects income
• Welfare benefits - increase less than wages
• Taxes - taxes are regressive
• Diseases and other health problems affect poorer more as they have less ability to access healthcare - global too
• Wars and conflicts - global
• Corruption and tyranny - global
  Natural disasters - global

Question 2

X and y on Lorenz curve

Answer 2

X = distribution of households
Y = % of cumulative income

Question 3

Formula for Gini coefficient

Answer 3

area under Lorenz curve/ total area under trend line.

Question 4

Causes of income and wealth inequality within and between countries

Answer 4

• Inequality in wages
• Welfare payments
• Taxes
• Unemployment
• Inequality between countries due to: war, natural disasters, famines, tyrannical governments

Question 5

Significance of capitalism for inequality

Answer 5

• Inequality is essential to encourage risk taking and profit motive
• Inequality motivates workers, which encourages them to learn new skills and work hard.
• Can lead to monopoly power + generational wealth.
• Assumes everyone started from the same point