Economics - 0455 CIE

Poverty

Overview

Poverty is one of the deepest problems economics tries to solve. But before you can tackle it you have to be clear about what it means, because being poor in one of the world's richest countries is a very different thing from the extreme poverty that threatens survival in the poorest. Economists draw a sharp line between the two.

In this lesson you will learn the difference between absolute and relative poverty and explore the main causes of poverty: unemployment, low wages, illness, age and environmental factors. Understanding these causes is the first step to designing policies that can break the cycle of poverty.

Objectives

difference between absolute poverty and relative poverty
unemployment
low wages
illness
age
environmental factors

Lesson Note

Reducing poverty is a central aim of economic development. But poverty has many causes, and they reinforce one another: poor health makes it hard to work, lack of work means low income, and low income worsens health. Pinning down what poverty is and what drives it lets you judge which policies might actually break that cycle, which is exactly what examiners want you to be able to do.

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Lesson Evaluation

Congratulations on completing the lesson on Poverty. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.

You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.

Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.

Absolute poverty refers to a situation where people: A. earn less than the national average B. cannot afford the basic necessities for survival C. own no luxury goods D. pay no taxes Answer: B
Relative poverty is measured by comparing a person's income to: A. a fixed global poverty line B. the average income in their society C. the price of food D. the minimum wage abroad Answer: B
Which of the following is a cause of poverty? A. high wages B. full employment C. illness and poor healthcare D. rapid economic growth Answer: C
A person can be in relative poverty but not absolute poverty when they: A. cannot afford food B. earn below the average but can meet basic needs C. live in a low-income country D. have no income at all Answer: B
A drought that destroys crops causes poverty mainly because it: A. raises wages B. reduces farmers' income and food supplies C. increases employment D. lowers prices Answer: B