4.2 Absolute and relative poverty

The difference between absolute and relative poverty is:

• Absolute poverty refers to a fixed minimum standard of living, while relative poverty is defined in relation to the economic status of others in society.

• Absolute poverty is based on social comparisons, while relative poverty is based on a fixed income threshold.

• Absolute poverty changes with societal standards, while relative poverty remains constant over time.

• There is no difference between absolute and relative poverty.

The main causes of absolute poverty are:

• Lack of education, unemployment, and poor health care

• High income, good education, and stable jobs

• Technological advancement and globalization

• Strong government policies and social welfare

According to the World Bank, what is the percentage of the global population living in extreme poverty in 2018?

• 8.6 percent

• 15.2 percent

• 3.1 percent

• 20.5 percent

Which of the following is NOT a cause of absolute poverty?

• High levels of debt

• High rates of formal employment

• Endemic corruption

• Absence of basic property rights

Relative poverty is defined as having an income less than 60% of the median income within a country.

• True

• False

What is the main determinant of per capita incomes according to the worksheet?

• Labour productivity

• Population growth

• Government spending

• Trade openness

Which of the following is NOT listed as a factor that might limit the value of labour productivity in low-income countries?

• High rates of urbanization

• Weaknesses in human capital and know-how

• Chronic critical infrastructure gaps

• Deep-rooted gender inequalities

Relative poverty occurs because income and consumption are ______ across households, communities, and regions.

• skewed

• equal

• stable

• uniform

Which of the following is a main cause of relative poverty according to the worksheet?

• Increase in minimum wage

• Cuts in top rate income taxes

• Decrease in food prices

• Increase in trade unions

The UN’s multi-dimensional poverty index (MDPI) only considers income as a measure of poverty.

• True

• False