POVERTY

Question 1

HOW IS ABSOLOUTE POVERTY?

Answer 1

THE WORLD BANK RECENTLY DEFINED TME NEW ABSOL OUTE POVERTY LINE AS THE PERCENTAGE OF THE POPULATION OF COUNTRY LIVING ON LESS THAN $ 1.90 A DAY ADJUSTED FOR PPP.

Question 2

WHAT IS RELATIVE POVERTY?

Answer 2

IN THE EU IT IS DEFINED AS THE PEOPLE WHO EARN LESS THAN 60% OF MEDIAN INCOME R CONSIDERED POOR.

Question 3

WHY IS THE MEDIAN USED FOR RELATIVE POVERTY AS OPPOSED TO THE MEAN?

Answer 3

HIGH EARNERS E.G FOOTBALL PLAYERS WILL DRAG UPTHE AVERAGE AND THESE R NOT REPRESENTATIVE OF EVERYDAY LIFE.

Question 4

WHAT CAUSES ABSOLOUTE POVERTY LEVELS TO CHANGE?

Answer 4

1. CHANGES IN GDP
2. CHANGES IN STATE SUPPORT
3. DEVELOPMENT SCHEMES
4. TECH CHANGES

Question 5

WHAT CAUSES RELATIVE POVERTY TO CHANGE?

Answer 5

1. CHANGES IN STATE SUPPORT
2. DEREGULATION
3. TAXATION SYSTEM
4. MIN WAGE LEVELS

Question 6

WHAT IS INEQUALITY?

Answer 6

REFERS TO THE DISTRIBUTION OF RESOURCES WITHIN SOCIETY.

Question 7

WHAT DOES THE LORENZ CURVE ILLUSTRATE?

Answer 7

PLOTS THE CUMULATIVE% OF THE POPULATION AGAINST THE CUMULATIVE % OF INCOME.

Question 8

WHAT DOES SHIFTING A LORENZ CURVE OUTWARDS ILLUSTRATE?

Answer 8

AN INCREASE IN INEQUALITY.

Question 9

WHAT IS A KUZNETS CURVE?

Answer 9

CAN SHOW HOW INEQUALITY CHANGES WITH ECONOMIC DEVELOPMENT.

Question 10

WHAT ARE THE AXIS OF A KUZNETS CURVE?

Answer 10

Y-AXIS = GINI INDEX
X-AXIS = DEGREE OF DEVELOPMENT

Question 11

WHAT ARE WAYS TO REDUCE INCOME INEQUALITY?

Answer 11

1. RAISE MIN WAGE
2. PROGRESSIVE TAX
3. INCREASED WELFARE SPENDING
4. INCREASE ACCESS TO EDUCATION AND TRAINING

Question 12

What is a poverty trap?

Answer 12

Where you are financially better off by not working e.g by taking a job you lose your job seekers allowance, housing benefits or free schools meals for your children. Comes as a result of an increase in benefits.

Question 13

What gini coefficient figure corresponds to complete equality?

Answer 13

0

Question 14

What gini coefficient figure corresponds to complete inequality?

Answer 14

1

Question 15

What are the causes of income inequality within countries?

Answer 15

1. Education - high skilled = high pay
2. Wages - strength of trade unions + levels of discrimination
3. Unemployment rates
4. Regressive tax
5. Low benefits
6. Difference in wealth - owners of assets normally receive income streams e.g rent

Question 16

What are the causes of income inequality between countries?

Answer 16

1. Globalisation
2. Education/health levels
3. Tech levels/infrastructure
4. Prebisch Singer hypothesis - poorer countries sell income inelastic agricultural goods and make less income despite higher world GDP
5. Debt

Question 17

What are the causes of wealth inequality within countries?

Answer 17

1. Inheritance
2. Existing wealth - income from existing wealth can be used to purchase more assets
3. Income differentials
4. Property in some areas rise in price faster than other areas

Question 18

What are the causes of wealth inequality between countries?

Answer 18

1. Difference in income levels
2. Low levels of savings - can’t invest
3. Colonialism - developed nations have already taken sources of wealth

Question 19

Why is the kuznets curve that shape?

Answer 19

As countries industrialise, inequality tends to increase due to :
1. Profits of growing firms going to the owner and being reinvested into more wealth and income
2. Low wage levels due to high levels of rural to urban migration

BUT - inequality then tends to fall due to high levels of urbanisation + greater amounts of govt redistribution

Question 20

Why is inequality inevitable in a capitalist society?

Answer 20

1. Profit motive necessary to encourage businesses to take risks and innovate
2. Poverty acts as an incentive to work hard
3. Workers with different skills will attract different wages
4. Profits needed for R&D

Question 21

Why is inequality perhaps not inevitable in a capitalist society?

Answer 21

1. Can be offset by govt redistribution
2. Kuznet’s work can be disproved by increases in GDP and equality in Asian Tigers e.g South Korea and Taiwan