Unit 3.4 - Economics of Inequality & Poverty
What you need to know and understand:
Key concepts:
Concepts to understand:
- Relationship between equality and equity
- The meaning of economic inequality
- Unequal distribution of income
- Unequal distribution of wealth
- Unequal distribution of income
- Measuring economic inequality
- Lorenz curve and Gini coefficient (index)
- Lorenz curve and Gini coefficient (index)
- Meaning of poverty
- Difference between absolute and relative poverty
- Difference between absolute and relative poverty
- Measuring poverty
- Single indicators including:
- international poverty lines
- minimum income standards
- international poverty lines
- Composite indicators including the Multidimensional Poverty Index (MPI)
- Single indicators including:
- Difficulties in measuring poverty
- Causes of economic inequality and poverty, including:
- inequality of opportunity
- different levels of resource ownership
- different levels of human capital
- discrimination (gender, race and others)
- unequal status and power
- government tax and benefits policies
- globalization and technological change
- market-based supply side policies
- inequality of opportunity
- The impact of income and wealth inequality on:
- economic growth
- standards of living
- social stability
- economic growth
- The role of taxation in reducing poverty, income and wealth inequalities
- Progressive, regressive and proportional taxes
- Average and marginal tax rates [HL only]
- Average and marginal tax rates [HL only]
- Direct taxes
- Personal income
- Corporate income
- Wealth
- Personal income
- Indirect taxes
- Progressive, regressive and proportional taxes
- Further policies to reduce poverty, income and wealth inequality, including:
- policies to reduce inequalities of opportunities/ investment in human capital
- transfer payments
- targeted spending on goods and services
- universal basic income
- policies to reduce discrimination
- minimum wages
- policies to reduce inequalities of opportunities/ investment in human capital
Key concepts:
- Scarcity
- Choice
- Efficiency
- Equity
- Economic well-being
- Sustainability
- Change
- Interdependence
- Intervention
Concepts to understand:
- Change in the conditions of the demand and supply sides of the economy cause economic activity to vary over time.
- Fluctuations in economic activity impact the economic well-being of individuals and societies.
- Different schools of macroeconomic thought identify different causes and offer different solutions for macroeconomic problems.