economics unit 4

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Income
a flow of money
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wealth
a stock concept
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Absolute Poverty
measures the number of people living below a certain income threshold, or the number of households unable to afford certain basic goods and services. The accepted UN deffinition is living on less then $1.25
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Relative Poverty
measures the extent to which a households financial resources falls below an average income level. The most commonly used threshold of low income in the EU is 60% of median household income.
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What are the 9 causes of Inequality?
differences in pay, discrimination, compensating differentials, unemployment, regional differences in pay, varying ownership of financial assets, changes to the tax and benefits system, globilisation, free trade.
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The gini coefficient
a commonly used measure of income inequality. it condensed the entire income distribution for a country into a single number bewteen 1 and 0. the higher the number, the greater the degreee of income ineqaulity.
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Examle of a countries gini coefficient
Brazil - 53.6
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the poverty trap
this affects people living in households on low incomes. it creates a disincentive to work or work longer hours because of the effects of the income tax and welfare state benefits.
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Globilisation
refers to the growing intergration of national economies in terms of trade, financial flows, information and technology, and the movement of people. It can also be defined as the situation where the value of world trade rises faster then GDP.
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MNC
a country that owns and controls the production or service facilities in more then one country.
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Primary product dependency
when a country relies on specialising in and exporting low value added primary commodities, such as oil or diomands.
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Economic growth
an increase in either real GDP, or the productive potential of a country
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Eco Development
an increase in living standards, and is measured using the HDI
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Human development index
provides a score between 0 and 1 based on GDP per capita, literacy rates, and life expectancy.
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AID
the voluntary transfer of resources from one country to another
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FDI
investment undertaken in one country by companies based in other countries
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Card 2

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wealth

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a stock concept

Card 3

Front

Absolute Poverty

Back

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Card 4

Front

Relative Poverty

Back

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Card 5

Front

What are the 9 causes of Inequality?

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