Chapter 14: Problem 45
In country B, the population is 900 million and 100 million people are living below the poverty line. What is the poverty rate?
Short Answer
Expert verified
The poverty rate in country B is approximately 11.11%, which means that 11.11% of the population in country B are living below the poverty line.
Step by step solution
01
Identify the given numbers
In the question, we know that the total population of country B is 900 million people, and 100 million people are living below the poverty line. We will use these numbers to calculate the poverty rate.
02
Calculate the poverty rate
To find the poverty rate, we need to divide the number of people living below the poverty line by the total population, and then multiply the result by 100 to get the percentage. The formula to calculate the poverty rate is:
Poverty rate = \(\frac{\text{number of people below poverty line}}{\text{total population}} \times 100\)
Plugging in the values we have:
Poverty rate = \(\frac{100\,\text{million}}{900\,\text{million}} \times 100\)
03
Simplify and find the poverty rate
Now we can simplify the equation:
Poverty rate = \(\frac{100}{900} \times 100\)
Poverty rate = \(\frac{1}{9} \times 100\)
To get the percentage, we can multiply the fraction by 100:
Poverty rate = \(\frac{100}{9}\)
Poverty rate ≈ 11.11%
04
Interpret the result
The poverty rate in country B is approximately 11.11%. This means that 11.11% of the population in country B are living below the poverty line.
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Key Concepts
These are the key concepts you need to understand to accurately answer the question.
Understanding Economic Indicators
Economic indicators are key stats about the economy that can reveal the economic health and direction of a nation. These indicators can inform policy decisions and affect investments. The calculation of the poverty rate is an example of an economic indicator that provides insight into the level of economic disparity and overall wellbeing in a society.
For instance, when considering the poverty rate, it's not merely about a percentage. It also reflects on other associated indicators such as income inequality, employment rates, and GDP per capita. As individuals strive to understand their nation's economic standing, monitoring various economic indicators becomes essential. They include leading indicators, which predict future economic activity, coincident indicators, which reflect current conditions, and lagging indicators, which confirm trends that have already been experienced. By examining these, analysts and policymakers can make informed predictions and plans for economic growth and stability.
For instance, when considering the poverty rate, it's not merely about a percentage. It also reflects on other associated indicators such as income inequality, employment rates, and GDP per capita. As individuals strive to understand their nation's economic standing, monitoring various economic indicators becomes essential. They include leading indicators, which predict future economic activity, coincident indicators, which reflect current conditions, and lagging indicators, which confirm trends that have already been experienced. By examining these, analysts and policymakers can make informed predictions and plans for economic growth and stability.
Poverty Line Metrics
The poverty line, or threshold, is the minimum level of income deemed adequate in a given country. It's a metric that differs by country, reflecting various local economic conditions, prices, and needs. Metrics like the international poverty line take on a global perspective, but local metrics are vital for revealing disparities within a country's own borders.
In the exercise, calculating the poverty rate required an understanding of the poverty line metric specific to country B. The metric is crucial because it informs us who falls under the threshold of poverty, and therefore, helps determine the necessary social programs or policies to assist them. Metrics such as these have a profound impact on public policy, where decision-makers utilize these figures to address poverty and enhance citizens' quality of life efficiently. Therefore, it's essential for students to comprehend these metrics not just for solving math problems, but to participate in informed discussions about social economics.
In the exercise, calculating the poverty rate required an understanding of the poverty line metric specific to country B. The metric is crucial because it informs us who falls under the threshold of poverty, and therefore, helps determine the necessary social programs or policies to assist them. Metrics such as these have a profound impact on public policy, where decision-makers utilize these figures to address poverty and enhance citizens' quality of life efficiently. Therefore, it's essential for students to comprehend these metrics not just for solving math problems, but to participate in informed discussions about social economics.
Population Economics
Population economics is the study of how populations affect and are affected by economic systems. It incorporates analysis of demographic data, such as birth and death rates, age distribution, and migration patterns, to understand economic issues. In the context of poverty rates, population economics considers how the size and makeup of the population can influence economic outcomes, including poverty levels.
The exercise demonstrates a direct application of population economics: determining the percentage of the population that lives below the poverty line. By understanding population dynamics, economists can predict changes in poverty rates and recommend specific targeted policies to alleviate poverty. For example, if the majority of those below the poverty line are young, policies might focus on education and job training. Population economics provides a comprehensive approach to analyzing how economic policies can be tailored to best serve a country's unique demographic profile.
The exercise demonstrates a direct application of population economics: determining the percentage of the population that lives below the poverty line. By understanding population dynamics, economists can predict changes in poverty rates and recommend specific targeted policies to alleviate poverty. For example, if the majority of those below the poverty line are young, policies might focus on education and job training. Population economics provides a comprehensive approach to analyzing how economic policies can be tailored to best serve a country's unique demographic profile.