Whether the poverty measure is absolute or relative when a poverty threshold is not adjusted to reflect changes in the standard of living and whether this measure defines poverty according to how poor someone is relative to others or according to some fixed measure that doesn’t change over time.
Explanation of Solution
The poverty threshold would be an absolute measure of poverty because it helps in the comparison of different persons or households which is done by considering the income level in this case. This measure shows the number of people whose level of income is less than the minimum income level. And, hence, this measure does not define poverty according to how poor someone is relative to others or according to some fixed measure that doesn’t change over time because this measure would be done by relative poverty, which measures the poverty based on top population and the proportion of the bottom population as it determines the income inequality in the society.
Rather than this, it covers fixed measure that doesn’t change over time because it defines a line that is fixed in regard to the terms of living standards.
Introduction: The poverty rate shows the ratio of the number of people who are living below the poverty line in the country. The poverty rate in the country U is 11.6% in the year 2021.
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Krugman's Economics For The Ap® Course
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