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Questions and Answers
What is the primary purpose of the Foster-Greer-Thorbecke (FGT) index?
What is the Multidimensional Poverty Index (MPI) used for?
What is disposable income?
What is the primary purpose of redistribution policies?
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What is the primary goal of land reform?
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What is the characteristic of a progressive income tax?
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What is the characteristic of an indirect tax?
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What is a subsidy?
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What is asset ownership?
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What is the characteristic of a regressive tax?
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Study Notes
Poverty Reduction
- Between 1985 and 2018, the Philippines made significant progress in reducing poverty, with a two-thirds reduction in poverty rates.
Inequality
- Inequality refers to disparities in income, wealth, and opportunities among individuals or groups within a society.
- Factors contributing to growing inequalities include globalization, technological change, and shifts in redistribution policies.
Consequences of Extreme Inequality
- Three major consequences of extreme income inequality:
- Economic inefficiency
- Undermining of social stability and solidarity
- Unfairness
Social Welfare Function
- W = W(Y, I, P)
- Where Y is income per capita (positive), I is inequality (negative), and P is absolute poverty (negative)
Dualistic Development
- Three limiting cases of dualistic development:
- Emphasizing public distribution of necessities and direct transfer payments to help those in poverty
- Targeted government initiatives and comprehensive social and economic policies to achieve sustainable development and end poverty
Key Concepts
- Quintile: A 20% proportion of any numerical quantity
- Decile: A 10% portion of any numerical quantity
- Income inequality: Disproportionate distribution of total national income among households
- Lorenz curve: A graph depicting the variance of the size distribution of income from perfect equality
- Gini coefficient: An aggregate numerical measure of income inequality ranging from 0 (perfect equality) to 1 (perfect inequality)
Poverty Measures
- Absolute poverty: Situation of being unable or only barely able to meet subsistence essentials
- Headcount index: Proportion of a country’s population living below the poverty line
- Total poverty gap (TPG): Sum of the difference between the poverty line and actual income levels of all people living below that line
- Foster-Greer-Thorbecke (FGT) index: A class of measures of the level of absolute poverty
- Multidimensional Poverty Index (MPI): A poverty measure that identifies the poor using dual cutoffs for levels and numbers of deprivations
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Description
This quiz assesses understanding of socioeconomic inequality and poverty reduction, including factors contributing to growing inequalities and progress made in reducing poverty in the Philippines.
