Module 5.2: Poverty and Income Redistribution

Flashcards covering the definitions, causes, and policies related to absolute and relative poverty based on the lecture notes.

Poverty

A condition that exists when people lack adequate income and wealth to sustain a basic standard of living.

Absolute Poverty

A state of extreme or outright poverty where people are undeniably poor and their income is entirely spent on minimal amounts of food, clothing, and shelter essential for survival.

Income Threshold

Also called the poverty line, it is the level of income used to measure individuals in poverty; the World Bank set a common value at $\$1.25$ a day.

Absolute Poverty (United Nations 1945 Definition)

A condition characterized by severe depreciation of basic human needs including food, safe drinking water, sanitation facilities, health, shelter, education, and information.

Relative Poverty

A comparative measure of poverty that evaluates the extent to which a person's financial resources fall below the average income for the country's population.

Labour Productivity

A measure of the efficiency of labour in the production process, such as output per worker.

GDP per capita

Calculated by dividing the gross domestic product of a country by its population to find the income level of the average person.

Life Expectancy

The number of years that the average person in a country is anticipated to live for, based on statistical trends.

Literacy Rates

The proportion of the population aged $15$ and above who can read and write.

Population Growth

The annual percentage change in the population of a country.

Infrastructure

The transportation and communications networks necessary for the efficient functioning of an economy, such as buildings, railways, roads, airports, water systems, the internet, and power supplies.

Foreign Direct Investment (FDI)

Cross-border investment made by multinational companies and other investors.

Public Debt

The money owed by the government (public sector), often used to finance public sector expenditure in low-income countries.

Primary Sector Output

Production and export of agricultural products; low-income countries often over-rely on these, which tend to have low prices and profit margins.

Supply-Side Policy

Long-term strategies aimed at increasing and improving the quality and quantity of factors of production.

Progressive Taxation

A system where higher-income groups pay a higher percentage of their incomes in tax, with proceeds used to support lower-income groups.

National Minimum Wage

The introduction of a higher minimum wage rate to improve the standard of living for low-income households and alleviate poverty.