4.2 Poverty And Inequality Flashcards
What is absolute poverty?
Absolute poverty is a situation where individuals cannot afford to acquire the basic necessities for a health and safety existence
What is relative poverty?
Relative poverty is a situation where household income is a certain percentage less than the median household income in the economy
What is income inequality?
Income inequality refers to the unequal distribution of income to households
What is wealth inequality?
Wealth inequality referees to differences in the amount of assets that households own
What are the 2 main measures of income inequality?
Lorenz curve and the gini coefficient
What is the Lorenz curve?
The Lorenz curve is a visual representation of inequality that exists between households in an economy
What is the gini coefficient?
Measures the distribution of income in a population. The closer the value to 1 the worse income inequality
What is the formula for gini coefficient?
A/ A+B
What are the causes of inequality?
- Education, training and skills
- Trade unions
- Benefit system
- Pension payments
- Wage rates
- Employment legislation
- Tax structure
- Asset ownership
