Poverty and Inequality

What Poverty and Inequality covers

Covers how poverty and inequality are defined and measured, why they arise, and the part the market itself plays in producing them.

The 3 subtopics

Each one has its own page.

• Absolute and relative povertyRecall questions on absolute and relative poverty and how each is measured, the headcount ratio and poverty gap, and the causes of changes in poverty, from education, transfers, taxation and wages to unemployment, inflation and globalisation.Open →
• Measuring inequality: the Lorenz curve and Gini coefficientRecall questions on income against wealth inequality, the Lorenz curve and Gini coefficient, mean against median income, quintiles and deciles, the 90:10 and quintile share ratios, and drawing a Lorenz curve from quintile shares.Open →
• The causes of inequality, and capitalism's part in itRecall questions on the causes of income and wealth inequality within countries, the causes of inequality between countries, how growth, deindustrialisation, globalisation and technology change it, and the part capitalism plays.Open →

What you need to know

Answer each one before you reveal it.

Take Poverty and Inequality further

The same content, four other ways.

Commonly confused

Pairs that lose marks when they are blurred together.

• Absolute poverty vs Relative poverty

  Absolute poverty: an income too low to afford the basic necessities of life, measured against a fixed line. Relative poverty: an income far below the typical income of the society, measured against a moving line.

• The Lorenz curve vs The Gini coefficient

  The Lorenz curve: a diagram plotting cumulative share of income against cumulative share of population. The Gini coefficient: a single number from zero to one summarising how far that diagram departs from equality.

• Income inequality vs Wealth inequality

  Income inequality: an uneven distribution of the earnings people receive over a period. Wealth inequality: an uneven distribution of the assets people hold at a point in time, which is usually the wider gap.

Questions from this topic

Each one with the model answer underneath.

1. 1

   What is absolute poverty?

   Model answer

   A condition where household income is below a fixed threshold necessary to afford basic necessities such as food, shelter, clean water, and clothing required for survival.

2. 2

   What is relative poverty?

   Model answer

   A condition where household income falls below a certain percentage of the median income in a particular society, meaning individuals cannot afford the standard of living considered normal in that society.

3. 3

   How does the threshold used to measure absolute poverty differ from that used for relative poverty?

   Model answer

   Absolute poverty uses a fixed monetary threshold that does not change with overall living standards, while relative poverty uses a threshold that varies with the income distribution of a specific country or region.

4. 4

   Why can absolute poverty theoretically be eliminated while relative poverty cannot?

   Model answer

   Absolute poverty can be eliminated because it is measured against a fixed threshold that all incomes could exceed. Relative poverty will always exist in any society with income inequality because it is measured relative to median income.

5. 5

   What type of poverty does the World Bank international poverty line measure, and how is it expressed?

   Model answer

   It measures absolute poverty, set at a specific dollar amount per day adjusted for purchasing power parity.

6. 6

   What is the common threshold used to measure relative poverty?

   Model answer

   The proportion of households earning below 60% of median equivalised household income.

What is inside Levo

Six ways to work the same material.

Poverty and Inequality revision questions

What does Poverty and Inequality cover in Edexcel A-Level Economics A?

3 subtopics: absolute and relative poverty, measuring inequality: the lorenz curve and gini coefficient and the causes of inequality, and capitalism's part in it. Each one has its own page with questions and model answers.

How is Poverty and Inequality organised?

By the Edexcel 9EC0 specification, subtopic by subtopic, so it matches the order you are taught it in.