Economics 4.2 Poverty and Inequality

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Absolute Poverty
When individuals are not able to consume sufficient necessities to survive, such as water, shelter and food.
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Relative Poverty
When individuals are not meeting the existing living standards for the average person in a country.
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Three main causes of poverty
Economic Stagnation, Lack of Education, Income Inequality.
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Lorenz Curve
Shows the degree on income inequality in a society. The further away they are from the 45 degree line, the higher the inequality.
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Inequality
The gap between the rich and the poor in terms of income and wealth.
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Wealth
Relates to a difference in people's share of assets.
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Types of Wealth
Property Wealth, Physical Wealth (Cars etc), Financial Wealth (Stocks and Shares), Private Pension Funds.
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Causes of Wealth Inequality
Income levels, Wealth levels, Inheritance, Chance.
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Causes of Income Inequality
Earned Income, Non-workers, Physical and financial wealth, Household composition, Taxes, Benefits, Education, Training and skills, Trade union power.
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Solutions to reducing inequality
Raise minimum wage, Have a fixed maximum wage, Equal pay legislation, Trade-union friendly legislation, Price controls on necessities, Services can be provided based on income.
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Other cards in this set

Card 2

Front

When individuals are not meeting the existing living standards for the average person in a country.

Back

Relative Poverty

Card 3

Front

Economic Stagnation, Lack of Education, Income Inequality.

Back

Preview of the back of card 3

Card 4

Front

Shows the degree on income inequality in a society. The further away they are from the 45 degree line, the higher the inequality.

Back

Preview of the back of card 4

Card 5

Front

The gap between the rich and the poor in terms of income and wealth.

Back

Preview of the back of card 5
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