Poverty and Inequality

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How do government tax and benefit policies affect income distribution?

They can reduce or increase inequality depending on how progressive or regressive they are.

Why is poverty difficult to measure accurately?

Because poverty is multidimensional and involves both income and non-income factors, including access to services.

What is the impact of inequality on economic growth?

High inequality can reduce growth by limiting access to education and increasing social unrest.

What does the Lorenz curve show?

It shows the cumulative distribution of income or wealth and is used to illustrate inequality.

What is the difference between equality and equity in economics?

Equality refers to treating everyone the same, while equity means distributing resources based on need to achieve fairness.

What are average and marginal tax rates?

Average tax rate is total tax divided by income; marginal is the tax on the next dollar earned.

What does the Gini coefficient measure?

The degree of income inequality in an economy, ranging from 0 (perfect equality) to 1 (maximum inequality).

What are the two key components of economic inequality?

Unequal distribution of income and unequal distribution of wealth.

What is the impact of globalization on inequality?

Globalization can increase inequality by benefiting skilled workers and capital owners more than low-skilled workers.

What is the difference between absolute and relative poverty?

Absolute poverty refers to not meeting basic needs; relative poverty is being poor compared to others in the same society.

How do minimum wages reduce inequality?

They set a wage floor, raising incomes for the lowest-paid workers.

What is the Multidimensional Poverty Index (MPI)?

An index that considers education, health, and living standards to assess poverty more broadly.

How does inequality of opportunity cause poverty?

When people do not have equal access to education, healthcare, or jobs, it perpetuates poverty.

How do progressive taxes reduce inequality?

They impose higher tax rates on higher income earners, redistributing wealth.

How can market-based supply-side policies worsen inequality?

They may reduce government support or regulations that protect vulnerable populations.

What is universal basic income and how could it address poverty?

A regular, unconditional payment to all citizens that ensures a minimum standard of living.

What are some examples of discrimination that can lead to poverty?

Discrimination based on gender, race, or ethnicity can limit access to education and jobs.

Give one example of a single indicator used to measure poverty.

International poverty lines, such as the $2.15/day threshold set by the World Bank.

How do different levels of human capital contribute to inequality?

People with higher education and skills have better job opportunities and higher incomes.

What are transfer payments and how do they help reduce poverty?

Payments such as unemployment benefits or pensions provide income support to low-income individuals.

The Curious Economist

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