Unit notes and practice questions
Everything here is for unit 6 of the Grade 12 Economics textbook: what the chapter covers, the short notes, practice questions with their answers, and the lesson video where one exists.
The cards filed under this chapter on the Grade 12 Economics page. Open one at a time.
When you use it
Use when distinguishing the conceptual boundaries between absolute deprivation and relative income inequality.
Watch out
Relative poverty measures income distribution relative to others and can exist even when basic subsistence needs are met, while absolute poverty is the inability to afford life-sustaining essentials.
Drafted from Grade 12 Economics, pages 123-148, then checked twice before it went up
When you use it
Use to quantify the degree of income inequality in an economy using the Lorenz curve areas.
Watch out
A Gini coefficient of 0 means perfect equality, while a value of 1 represents complete inequality.
Drafted from Grade 12 Economics, pages 123-148, then checked twice before it went up
When you use it
Use this formula to calculate the proportion of a country's total population that falls below the absolute poverty line.
Watch out
Headcount ratio only measures the incidence of poverty, not the depth or severity of income shortfall among the poor.
Drafted from Grade 12 Economics, pages 123-148, then checked twice before it went up
| Institution | Nature | Primary Function |
|---|---|---|
| Idir | Traditional burial and group insurance association | Financial and social assistance during bereavement and emergencies |
| Iqub | Rotating savings and credit association | Pooling regular savings to fund investments and major household expenses |
| Debo | Communal labour pooling group | Rotational free agricultural and manual labour sharing among members |
When you use it
Use when identifying traditional Ethiopian socio-economic institutions that help alleviate poverty and provide mutual security.
Watch out
Idir is a long term insurance-oriented association, whereas Iqub focuses primarily on rotating credit and savings.
Drafted from Grade 12 Economics, pages 123-148, then checked twice before it went up
| Dimension | Indicator | Weight |
|---|---|---|
| Health | Child mortality in the family | |
| Health | Malnutrition of adult or child | |
| Education | No household member completed 5 years of schooling | |
| Education | Any school-age child out of school (grades 1 to 8) | |
| Living Standard | Deprivations in electricity, water, sanitation, floor, cooking fuel, assets |
When you use it
Use when examining the three core dimensions and deprivations comprising the Multidimensional Poverty Index.
Watch out
Health and Education each account for one third total weight, divided equally into one sixth per indicator.
Drafted from Grade 12 Economics, pages 123-148, then checked twice before it went up
10 multiple-choice questions written against this chapter, each with its answer and the reason. Try one before you open the answer.
Question 1
Which organisation defined poverty as "the pronounced deprivation in wellbeing"?
Answer: A World Bank
Why
The unit states that the World Bank (2000) defines poverty as "the pronounced deprivation in wellbeing". The other organisations are not given this definition in the text.
Question 2
Which type of poverty is the situation of someone being unable, or only barely able, to meet subsistence essentials such as food, clothing, and shelter?
Answer: B Absolute poverty
Why
The text defines absolute poverty as being unable or only barely able to meet subsistence essentials such as food, clothing, and shelter. Relative poverty is defined by comparison with other people's standing in the economy.
Question 3
What does a Gini coefficient of 0 show?
Answer: B Perfect equality, where the Lorenz curve coincides with the main diagonal
Why
The text says that if the Gini coefficient is 0, the Lorenz curve coincides with the main diagonal and implies perfect equality. A Gini coefficient of 1 shows perfect inequality.
Question 4
Which Ethiopian informal institution is described in the unit as a traditional burial association that gives support to members in times of death and grief?
Answer: C Idir
Why
The unit says that Idir is the most common informal institution in Ethiopia and, although it is a form of burial society, it also supports members in times of death and grief. Iqub is a rotating credit association, and Debo is a work group.
Question 5
The text lists three steps for measuring poverty. In the list, what is the second step?
Answer: C Establishing a minimum acceptable standard of that indicator (the poverty line)
Why
The three steps are: (1) defining an indicator of welfare, (2) establishing a minimum acceptable standard of that indicator to separate the poor from the non-poor (the poverty line), and (3) generating a summary statistic. So the second step is setting the poverty line.
Question 6
In a town, 2,000 people are counted as living below the absolute poverty line. The total population of the town is N. Which formula gives the headcount index (headcount ratio)?
Answer: B H / N
Why
The text says that if H is the headcount of people whose income or consumption falls below the absolute poverty line, the headcount index (headcount ratio) is H/N, where N is the total population. You divide the number of poor people by the whole population.
Question 7
In the Multidimensional Poverty Index (MPI) as used by the UNDP, each of the two health indicators (child death in the family, and malnutrition) counts how much toward the maximum possible deprivation?
Answer: B One-sixth
Why
The text says health has two indicators, both weighted equally, and each counts one-sixth toward the maximum possible deprivation in the MPI. Education also has two indicators, each worth one-sixth.
Question 8
According to the government, the headcount poverty in Ethiopia declined from 59% in 1992 to 29.5% in 2011. What was the headcount poverty rate in Ethiopia in 1992?
Answer: D 59%
Why
The unit states that headcount poverty in Ethiopia was 59% in 1992 and fell to 29.5% in 2011. The 24% and 38% figures in the text refer to a different period (2008/09 to 2018/19).
Question 9
In the multidimensional poverty approach, a person is identified as multidimensionally poor by the "dual cut-off method". Which description matches this method?
Answer: B A person is poor if they have cut-off levels within each dimension, and are deprived in at least a set number of dimensions.
Why
The text describes two cut-offs. First, there are cut-off levels within each dimension (similar to a poverty line). Second, there is a cut-off for the number of dimensions in which a person must be deprived. Option B combines both steps.
Question 10
In Amartya Sen's capability approach, what are the "conversion factors"?
Answer: B The personal, socio-political, and environmental conditions that decide whether a person can turn resources into a functioning
Why
The text says whether someone can convert a set of resources and public goods into a functioning depends on personal, socio-political, and environmental conditions, which are called conversion factors. Income alone does not decide this, which is why Sen's approach looks beyond income.
The app holds 12 questions on this unit, marked as you go. These are the first 10.
Unit 6 runs from page 122 to page 147 of the Ministry of Education edition.
Ministry of Education edition, English, 214 pages
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