Poverty and inequality Cambridge IGCSE Economics revision
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In plain words
There are two ways of being poor. One is to lack what any human needs to stay alive and healthy: food, clean water, shelter. The other is to have far less than the people around you, so that you cannot take part in the ordinary life of your society.
A rich country may have almost none of the first kind and plenty of the second.
5 things to know
- Absolute poverty is not having enough income to meet basic needs: food, shelter, clothing and clean water.
- Relative poverty is having an income far below the average for the country, so that a person cannot afford the living standard that is usual there.
- Income inequality is the unequal sharing of income among the households of a country.
- Causes of poverty: unemployment, low wages, illness or disability, old age, lack of education, and environmental factors such as drought and floods.
- Policies to reduce poverty and redistribute income: promote economic growth, improve education and healthcare, pay more generous state benefits, use progressive taxation, and set a national minimum wage.
Tips and tricks
- Economic growth can reduce absolute poverty while relative poverty rises: everyone may be better off, but the rich by more.
- When you explain a policy, show the link to income: education leads to skills, skills to better-paid jobs, and those to higher income.
It lands in your notebook with its questions as flashcards.
Poverty and inequality: 5 questions and answers
These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.
A family cannot afford enough food or safe shelter. They are in
They lack the basics needed to live.
Relative poverty means
It is a comparison with others in the same society.
Which is a cause of poverty?
Without work there may be little or no income.
Which policy is most likely to reduce income inequality?
It takes a bigger share from those with the highest incomes.
Average incomes in a country double, but the incomes of the poorest stay the same. What has happened to relative poverty?
The poorest are now further below the average.
Quiz
5 questions
Tap an answer and you’ll see straight away whether it’s right, and why.
Worksheet
3 questions, 8 marks. Write your answers on paper, then check them.
Poverty and inequality
Cambridge IGCSE Economics 0455 · 8 marks · papermunch.org
Name ______________________________ Date ______________
Explain the difference between absolute poverty and relative poverty.[2]
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Absolute poverty is being unable to afford basic needs such as food and shelter. Relative poverty is being poor compared with others in the same country, with an income well below the average.
Explain how improved education can reduce poverty.[3]
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Education gives people skills and qualifications, so they are more productive and can get better-paid jobs. Their incomes rise, and they are less likely to be unemployed.
Explain how a government can use taxes and benefits to redistribute income.[3]
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A progressive income tax takes a larger share from people on high incomes. The revenue pays for benefits and services for people on low incomes, which narrows the gap between them.
Answers: Poverty and inequality
- 1. Absolute poverty is being unable to afford basic needs such as food and shelter. Relative poverty is being poor compared with others in the same country, with an income well below the average.
- 2. Education gives people skills and qualifications, so they are more productive and can get better-paid jobs. Their incomes rise, and they are less likely to be unemployed.
- 3. A progressive income tax takes a larger share from people on high incomes. The revenue pays for benefits and services for people on low incomes, which narrows the gap between them.