Poverty

Question 1

What does purchasing power parity tell us?

Answer 1

how much of one currency is needed to purchase a basket of goods compared to another currency.

Question 2

What is Absolute poverty?

Answer 2

Being unable to afford basic necessities such as food, clean water and shelter. The World Bank measures absolute poverty by looking at the number of people living on less than $3 a day in 2025.

Question 3

What is relative poverty?

Answer 3

Relative poverty is defined as earning less than a particular percentage of a country’s average income. In the UK, people living on less than 60% of the median income are in relative poverty.

Question 4

What are the main factors inflenceing poverty rates?

Answer 4

1) Infrastructure
2) Education and training
3) AID

Question 5

How may a lack of access to infrastructure effect poverty?

Answer 5

A lack of access to electricity for 8 hours a day has a very significant negative impact on infrastructure. It leads to a considerable reduction in productivity meaning businesses make less profit. This will in turn lead to increased unemployment and reduced incomes. As a result, people will remain in poverty and it is possible that the number of people living below the poverty line will increase.

Question 6

What is the likely impact of a worsening of the standard of education on poverty rates?

Answer 6

A fall in the standard of education may lead to a decrease in skills which will lower productivity and therefore reduce incomes. This can significantly increase absolute poverty.

Question 7

How may aid effect the levels of poverity?

Answer 7

Aid can reduce poverty. If aid is spent on healthcare or education it can make workers more productive which should increasetheir incomes and reduce poverty

Question 8

why aid might not actually help reduce poverty?

Answer 8

Some politicians are corrupt and may take aid money and use it for their own consumption. This can increase AD and cause demand-pull inflation. If those in poverty are on a fixed income, this inflation will actually end up decreasing their real income and making them even poorer!