Socioeconomic Inequality and Poverty Reduction
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Questions and Answers

What is the primary purpose of the Foster-Greer-Thorbecke (FGT) index?

  • To measure economic development
  • To measure income inequality
  • To measure asset ownership
  • To measure absolute poverty (correct)

    • What is the Multidimensional Poverty Index (MPI) used for?

  • To measure economic development
  • To measure income inequality
  • To identify the poor using a single cutoff
  • To identify the poor using dual cutoffs for levels and numbers of deprivations (correct)

    • What is disposable income?

  • Income earned before income taxes
  • Income earned after personal income taxes
  • Income available to households for spending and saving after personal income taxes have been deducted (correct)
  • Income earned before personal income taxes

    • What is the primary purpose of redistribution policies?

    <p>To reduce income inequality and promote economic development</p> Signup and view all the answers

    What is the primary goal of land reform?

    <p>To improve the distribution of agricultural incomes and foster rural development</p> Signup and view all the answers

    What is the characteristic of a progressive income tax?

    <p>The rate increases with increasing personal income</p> Signup and view all the answers

    What is the characteristic of an indirect tax?

    <p>A tax levied on goods ultimately purchased by consumers</p> Signup and view all the answers

    What is a subsidy?

    <p>A payment by the government to producers or distributors to prevent the decline of an industry</p> Signup and view all the answers

    What is asset ownership?

    <p>The ownership of land, physical capital, human capital, and financial resources that generate income for owners</p> Signup and view all the answers

    What is the characteristic of a regressive tax?

    <p>The ratio of taxes to income tends to decrease as income increases</p> Signup and view all the answers

    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.

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