Section A: Key terms and recall
Define absolute poverty. [1 mark]
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Absolute poverty is when a person's income is below a fixed minimum level needed to afford basic necessities such as food, shelter and clothing. (1 mark)
Define relative poverty. [1 mark]
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Relative poverty is when a person's income is significantly lower than the average income in the society in which they live, so they are poor compared to others. (1 mark)
State two causes of poverty. [2 marks]
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Any two of: unemployment, low wages, lack of education, poor health, discrimination, war or conflict, natural disasters, unequal distribution of income. (1 mark each, max 2 marks)
What is meant by income redistribution? [1 mark]
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Income redistribution is the process of transferring income from richer groups in society to poorer groups, often through taxes and benefits. (1 mark)
Give one example of a policy to alleviate poverty. [1 mark]
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Any one of: minimum wage, unemployment benefits, free education, free healthcare, progressive taxation, food subsidies. (1 mark)
Explain the difference between absolute and relative poverty. [2 marks]
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Absolute poverty is measured against a fixed standard of living, such as the ability to afford basic necessities. (1 mark) Relative poverty is measured against the average income of a society, so it changes as society's income changes. (1 mark)
Section B: Applying your knowledge
Maria lives in Country A, where the absolute poverty line is $2 per day. Maria earns $1.50 per day. Is Maria in absolute poverty? Explain your answer. [2 marks]
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Yes, Maria is in absolute poverty. (1 mark) Her income of $1.50 per day is below the absolute poverty line of $2 per day, so she cannot afford the basic necessities defined by that line. (1 mark)
Country B introduces a national minimum wage. Explain how this policy might help to reduce poverty. [3 marks]
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A minimum wage sets a legal floor on wages, so low-paid workers earn more. (1 mark) Higher wages increase the income of poor households, allowing them to afford more basic necessities. (1 mark) This can reduce absolute poverty and also reduce relative poverty if the wage rises faster than average incomes. (1 mark)
The government of Country C increases taxes on high-income earners and uses the money to provide free school meals for all children. Explain how this policy redistributes income. [2 marks]
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Taxing high-income earners takes money from richer households. (1 mark) Providing free school meals gives a benefit to all families, but it is relatively more valuable to poorer families, so income is effectively transferred from rich to poor. (1 mark)
| Year | Population (millions) | Number below poverty line (millions) |
|---|---|---|
| 2020 | 10.0 | 2.5 |
| 2021 | 10.5 | 2.1 |
Using the table above, calculate the poverty rate for Country X in 2021. Show your working. [2 marks]
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Poverty rate = (number below poverty line / total population) x 100. (1 mark) = (2.1 / 10.5) x 100 = 20%. (1 mark)
In Country D, many people work in low-paid farming jobs and have no access to education. Explain one cause of poverty in this country. [3 marks]
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Low-paid farming jobs mean workers earn very little income. (1 mark) Without access to education, they cannot gain skills to get better-paid jobs. (1 mark) This creates a cycle of poverty where low income leads to low education, which leads to low income again. (1 mark)
Section C: Explain and analyse
Explain two causes of poverty and how they can lead to a poverty trap. [5 marks]
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One cause is unemployment. When people cannot find work, they have little or no income, so they cannot afford basic necessities. (1 mark) This can lead to poor health and lack of skills, making it even harder to find work in the future, creating a poverty trap. (1 mark) Another cause is low levels of education. Without education, people can only get low-paid jobs. (1 mark) Low pay means they cannot invest in their own or their children's education, so the next generation also remains poor. (1 mark) This cycle is a poverty trap. (1 mark)
Discuss whether relative poverty is a more useful measure of poverty than absolute poverty. [5 marks]
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Relative poverty compares income to the average in society, so it shows whether people are excluded from normal activities. (1 mark) It can highlight inequality even in rich countries where absolute poverty is low. (1 mark) However, absolute poverty is easier to define and compare across countries because it uses a fixed standard. (1 mark) Absolute poverty can be eliminated, while relative poverty may always exist because there will always be some inequality. (1 mark) A balanced conclusion is that both measures are useful: absolute poverty for basic survival, relative poverty for social inclusion. (1 mark)
Evaluate two policies that a government could use to alleviate poverty and redistribute income. [5 marks]
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One policy is progressive taxation, where higher earners pay a larger percentage of their income in tax. (1 mark) This raises revenue that can fund benefits for the poor, redistributing income. (1 mark) Another policy is providing free education and healthcare. (1 mark) This improves the productivity of poor people, helping them earn higher incomes in the long run. (1 mark) However, these policies may reduce incentives to work or invest, which could slow economic growth. A combination of policies is likely to be most effective. (1 mark)
Challenge
'Economic growth alone is enough to reduce poverty.' Discuss. [5 marks]
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Economic growth can create jobs and raise average incomes, which may reduce absolute poverty. (1 mark) However, the benefits of growth may not reach the poor if income is unequally distributed. (1 mark) For example, growth in the oil industry may only benefit a few people, leaving many in poverty. (1 mark) Therefore, policies to redistribute income, such as taxes and benefits, are also needed. (1 mark) A balanced conclusion is that growth helps but must be combined with redistribution to reduce poverty effectively. (1 mark)