Chapter 19: Poverty and Inequality

Created by: Kathryn Mayes


This chapter is about the poverty and inequality rate of the United States. After learning about this chapter you will be able to...

  • 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

Student Version of Outline!

Fill in the Blank! :)

Teacher Version of Outline

The bold text are the answers.

Important Key Terms!

Disposable Income: income remaining after deduction of taxes and other mandatory charges, available to be spent or saved as one wishes.

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.

    The Line: Poverty in America