Principles of Economics, Chapter 14: Poverty Rate

How many Americans live in poverty?

37 million

In 1939, Roosevelt passed a law in which…

The government was required to help impoverished people

Which are some of the government transfer programs?

Social security (1935), Welfare (1935), Free school lunch (1946), Food stamps (1964), Medicaid (1965), Section 8 housing (1974)

How much does the government spend to help impoverished people?

$3.5 trillion/year

What is extreme poverty?

Living on $1.25/day or less ($450/yr)

What percentage of the world lives in extreme poverty?

14% of the world (1.1 billion people)

How many countries identify as under-developed?

47 countries

What are the 5 traditional solutions to world poverty?

Foreign aid, Foreign loans, surplus food, second-hand clothes, and international loans

What is foreign aid?

Wealthier countries give money to poorer countries

What is the problem with foreign aid?

30% of the money given never reaches the poor.

What are foreign loans?

Government to government loans

What is the problem with foreign loans?

Many poor nations cannot pay back their loans.

What is surplus food?

Excess foods from wealthy nations given to poorer countries

What is the problem with surplus food?

Farmers in poor countries are driven out of business because they cannot compete with free food.

What is second-hand clothes?

Wealthier countries ship clothes to poorer countries

What is the problem with second-hand clothes?

Cotton farms and textile mills are driven out of business because they cannot compete with free clothes.

What are international loans?

Organizations that help and donate to poorer countries give money to them.

What is the problem with international loans?

The loans distributed by organizations such as the U.N. and World Bank come with stipulations. Meaning that they have the right to tell the country’s government what to do, thus taking control over the country’s government.

What are the 2 new solutions to world poverty?

Social capitalism/entrepreneurship and micro-finance

What is social capitalism/entrepreneurship?

Helping the poor by selling them a good or service that will greatly improve their life.

What is micro-finance?

Interest-free loans given to small businesses in poor countries.