An economy experiences a period of uniform economic growth during which the real disposable income of every household increases by exactly 12%. Assuming the threshold for absolute poverty remains constant in real terms and the relative poverty line is set at 60% of the national median income, which of the following describes the most likely impact on absolute and relative poverty?
Absolute poverty will decrease, while relative poverty will remain unchanged.
Absolute poverty will remain unchanged, while relative poverty will decrease.
Both absolute poverty and relative poverty will decrease.
Both absolute poverty and relative poverty will remain unchanged.
37 exam-style questions on OCR A Level Economics Income distribution and welfare. Each one has a worked solution and a mark scheme showing where the marks go.