Chapter 19: Poverty and Inequality
Created by: Kathryn Mayes
Overview
- Describe the economic and poverty in the United States
- Explain how economic inequality and poverty arise
- Explain how governments redistribute income and describe the effects of redistribution on economic inequality and poverty
Important Key Terms!
Lorenz Curve: a graph on which the cumulative percentage of total national income (or some other variable) is plotted against the cumulative percentage of the corresponding population (ranked in increasing size of share). The extent to which the curve sags below a straight diagonal line indicates the degree of inequality of distribution.
Market Income: Refers to the sum of employment income (wages and salaries, net farm income and net income from non-farm unincorporated business and/or professional practice), investment income, retirement pensions, superannuation and annuities (including those from RRSPs and RRIFs ) and other money income.
Median Voter Theory: The median voter theorem states that "a majority rule voting system will select the outcome most preferred by the median voter". The median voter theorem makes two key assumptions. First, the theorem assumes thatvoters can place all election alternatives along a one-dimensional political spectrum
Money Income: People's income in the form of money, rather than benefits in kind etc
Negative Income Tax: money credited as allowances to a taxed income, and paid as a benefit when it exceeds debited tax
Poverty: the state of being inferior in quality or insufficient in amount.