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Questions and Answers
What is the purpose of dividing the population into quintiles?
What is the purpose of dividing the population into quintiles?
In a quintile distribution, how many individuals make up each group?
In a quintile distribution, how many individuals make up each group?
What percentage of total national income is received by the first quintile in the given example?
What percentage of total national income is received by the first quintile in the given example?
What does the term 'decile' refer to in income distribution?
What does the term 'decile' refer to in income distribution?
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How is national income calculated from the table provided?
How is national income calculated from the table provided?
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In the context of income distribution, what does personal distribution not consider?
In the context of income distribution, what does personal distribution not consider?
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What is the share of total income received by the richest quintile of the population?
What is the share of total income received by the richest quintile of the population?
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What does the term 'size distribution of income' refer to?
What does the term 'size distribution of income' refer to?
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What constitutes absolute poverty according to the definition provided?
What constitutes absolute poverty according to the definition provided?
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How is the headcount index for absolute poverty calculated?
How is the headcount index for absolute poverty calculated?
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What is a critical requirement for determining a local absolute poverty line?
What is a critical requirement for determining a local absolute poverty line?
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What are the implications of extreme inequality on social welfare?
What are the implications of extreme inequality on social welfare?
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Why is the international poverty line set at a constant level?
Why is the international poverty line set at a constant level?
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Which factor is not considered when estimating a local absolute poverty line?
Which factor is not considered when estimating a local absolute poverty line?
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What is the primary focus when discussing the extent of absolute poverty in developing countries?
What is the primary focus when discussing the extent of absolute poverty in developing countries?
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What risk does a person face when living below the absolute poverty line?
What risk does a person face when living below the absolute poverty line?
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What term does Rawls use to describe the uncertainty regarding self-interest and fairness in income distribution decisions?
What term does Rawls use to describe the uncertainty regarding self-interest and fairness in income distribution decisions?
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According to Rawls, why would most people support some level of income inequality?
According to Rawls, why would most people support some level of income inequality?
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What feature characterizes Kuznets's inverted-U hypothesis regarding income distribution?
What feature characterizes Kuznets's inverted-U hypothesis regarding income distribution?
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What does the Kuznets curve illustrate?
What does the Kuznets curve illustrate?
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What underlying factor typically explains why inequality worsens during the early stages of economic development?
What underlying factor typically explains why inequality worsens during the early stages of economic development?
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Which of the following statements is true regarding the Gini coefficient as studied by Kuznets?
Which of the following statements is true regarding the Gini coefficient as studied by Kuznets?
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What effect does Rawls suggest that notions of fairness have on income distribution preferences under the veil of ignorance?
What effect does Rawls suggest that notions of fairness have on income distribution preferences under the veil of ignorance?
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Which of the following is a misconception related to income distribution in the context of the veil of ignorance?
Which of the following is a misconception related to income distribution in the context of the veil of ignorance?
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What is suggested by the negative relationship between poverty and per capita income?
What is suggested by the negative relationship between poverty and per capita income?
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What has been observed in many sub-Saharan African countries regarding per capita income in the late 20th century?
What has been observed in many sub-Saharan African countries regarding per capita income in the late 20th century?
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What was the effect of expanded antipoverty and social safety net programs in Brazil after the turn of the century?
What was the effect of expanded antipoverty and social safety net programs in Brazil after the turn of the century?
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What concern is associated with public expenditures aimed at reducing poverty?
What concern is associated with public expenditures aimed at reducing poverty?
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How does a redistribution of income from the rich to the poor relate to savings rates?
How does a redistribution of income from the rich to the poor relate to savings rates?
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Why might poverty and growth be considered complementary rather than conflicting?
Why might poverty and growth be considered complementary rather than conflicting?
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What does a high level of absolute poverty potentially do to a country’s growth prospects?
What does a high level of absolute poverty potentially do to a country’s growth prospects?
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Which statement about the marginal savings rates of the poor is most accurate?
Which statement about the marginal savings rates of the poor is most accurate?
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What is one major effect of widespread poverty on credit access for the poor?
What is one major effect of widespread poverty on credit access for the poor?
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How do the spending habits of the rich in poor countries typically differ from those in developed countries?
How do the spending habits of the rich in poor countries typically differ from those in developed countries?
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What impact does raising the income levels of the poor have on the economy?
What impact does raising the income levels of the poor have on the economy?
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What relationship exists between low levels of living for the poor and economic growth?
What relationship exists between low levels of living for the poor and economic growth?
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What can be a psychological effect of reducing mass poverty?
What can be a psychological effect of reducing mass poverty?
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How does the expenditure pattern of the poor differ when they receive additional income?
How does the expenditure pattern of the poor differ when they receive additional income?
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Why might lowering poverty levels correlate with increased economic growth?
Why might lowering poverty levels correlate with increased economic growth?
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What is a common misconception about the relationship between poverty and economic growth?
What is a common misconception about the relationship between poverty and economic growth?
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Study Notes
Income Distribution
- Income distribution can be measured by how income is distributed among individuals, households, or groups.
- Analyzing income distribution can help understand economic inequality and its impact on social welfare.
- An income distribution table is used to show this distribution in increments of quintiles or deciles.
Measuring Absolute Poverty
- Absolute poverty refers to a lack of resources to meet basic needs, measured by an international poverty line.
- The current international poverty line is $1.90 per day in PPP dollars.
- The headcount index measures the number of people living below the poverty line.
- Local absolute poverty lines can be determined by analyzing food and other essential expenditures.
Poverty, Inequality, and Social Welfare
- Extreme income inequality can be harmful to economic development.
- Rawls' veil of ignorance suggests that most people would vote for a more equal income distribution if they were unaware of their own circumstances.
- While some degree of inequality is needed to encourage work and innovation, most people support a fairer distribution.
Kuznets's Inverted-U Hypothesis
- The Kuznets curve suggests that income inequality tends to worsen during early stages of economic growth, then improves in later stages.
- The inverted U-shape is often attributed to structural changes as countries transition from traditional to modern economies.
- While the Kuznets curve provides some optimism, it is important to note that poverty can still hinder economic growth in many countries.
Growth and Poverty
- Some believe that poverty reduction may conflict with rapid growth, as the poor may be marginalized by structural changes.
- Others believe that poverty reduction can actually accelerate growth because:
- Poverty limits economic opportunity and investment.
- The rich in developing countries often don't invest significantly in the local economy.
- Poverty can lower productivity and economic growth.
- Raising income levels of the poor stimulates demand for locally produced goods.
- Poverty reduction encourages public participation in development.
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Description
This quiz explores the concepts of income distribution and absolute poverty, analyzing their significance in evaluating economic inequality. Understand how income is distributed among different groups and the impact of poverty on social welfare. Key concepts such as the international poverty line and economic implications are covered.
