Ch. 29

• What is income?

  The flow of wages and earnings
• What is wealth?

  The stock of accumulated assets
• How is income distribution defined?

  It is how national income is distributed among the population
• What does wealth distribution refer to?

  It refers to how the nation’s wealth is distributed among the population
• What is the Lorenz curve?

  A graphical depiction of income distribution
• What does the Gini coefficient measure?

  The degree of inequality in a society
• What is absolute poverty?

  A situation where income is insufficient for survival
• What is the headcount ratio?

  A measure of the percentage living below the poverty line
• What is the International Poverty Line?

  An agreed measure defining absolute poverty at PPP$1.90
• What is relative poverty?

  Income falls below 60% of median income
• What is persistent poverty?

  Being in relative income poverty for 2 of 3 years
• How does absolute poverty differ from relative poverty?

  Absolute poverty is about survival needs, relative poverty is income-based
• What is the significance of the Gini coefficient in understanding income distribution?

  It quantifies income inequality within a society
• If a household's income is below 60% of the median, what type of poverty do they experience?

  Relative poverty
• If a household has been in relative income poverty for 2 of the last 3 years, what is their situation?

  They are experiencing persistent poverty