Capitalism and Poverty Flashcards

Flashcards of vocabulary terms and definitions related to capitalism and poverty.

Absolute poverty

A measure of poverty identified by determining a minimum threshold of material well-being.

Labor Income

Income earned by labor, such as wages and salaries.

Rent Payments

Payments to the owners of natural resources.

Interest Payments

Payments to the owners of capital.

Profit

Earnings to entrepreneurs who undertake the risk of productive enterprise.

GDP (Gross Domestic Product)

Total value of final output produced annually in a nation.

GDP per capita

GDP divided by population, a measure of average income or standard of living.

GNP (Gross National Product)

Total value of annual final production by citizens of a nation, both domestically and overseas.

Income

Flow of receipts over a period of time, such as earnings per month or year.

Wealth

Accumulation of past income earned and reinvested; a stock of assets people have acquired.

Real values

Values that are adjusted to eliminate differences resulting from inflation.

PPP (Purchasing Power Parity)

Measurement tool used to covert income data from local currencies to U.S. dollars, to facilitate real purchasing power comparisons.

Relative poverty

Concept identified by comparing levels of material well-being experienced by different individuals or groups, rather than comparing the level of well-being to a standard.

Institutions

Established behavior practices and patterns upon which the life of a community is built.

Formal institutions

Rules under which the members of the economy interact, such as constitutions and statutory law.

Informal institutions

Equally important as formal institutions, these are expectations of behavior.

Incentives

Rewards and punishments for behavior.

Markets

Institutions governing voluntary exchange.

Entrepreneurship

Institutions governing the risks and rewards of organizing resources for production.

Property rights

Institutions governing the ownership, use, and transfer of private property.

Rule of law

Extent and limits of authority and privilege.