Question

which factor is the both cause and effect of poverty​

Answer 1

Prices and wages together comprise the cause and effect of poverty.

Be it bad monsoon, costlier oil imports, fiscal deficit or rising income inequality, the businessmen never get poor it's only the middle class and poor who feel the wrath of inflation. Due to above mentioned factors and many others, excessive/unexpected price rise is a common sign of macroeconomic instability. When things become costlier, wages require a corresponding hike else they make the not so-rich people poorer.

Even in 2008 during the subprime crisis, the people who were severely hit by the crisis were the citizens and not the CEOs of Goldman Sachs or JP Morgan etc. Even the CEO of Lehmann brothers that collapsed and declared itself bankrupt went home with millions of dollars in his pocket. It were there middle and lower ranked employees and other common citizens who had to go through the test of times.

Here's the link though all these ceos never accept the truth but:

Case1: Now here, let’s consider a simple economic model where the businessmen won't increase the wages of their workers so easily; as they would like to be more conscious of their own earnings which would be suffering a setback too as a result of inflation. This is so because when inflation occurs then demand of goods which aren't inferior/giffen reduces significantly, which incur losses to the manufacturers and all middlemen involved. So as a result overall economy will slowdown as govt too will have fewer sources of revenue generation when people become jobless or experience decline in earnings.

(The govt can save the economy here by increasing public investment, fiscal expenditure or lowering taxes and the RBI can bail out employees by controlling the money supply in the economy and increasing interest rates.)

Case2: If the businessmen increase the wages of their worker wrt inflation then the spending ability of people would increase too relative to the price rise. So basically a price rise will lead to a rise in wages which will further induce a rise in prices further and so on. This will induce a sticky “wage-price” spiral which will keep on moving until monetary/fiscal policies are used to intervene in the markets for normalcy to return.

So, here wage-price are going to destabilise the economy.

(I mentioned 2 cases here because there are many factors that influence an economy so no one can't be really sure of what happens in a particular time zone and a particular location. What happens in China by increasing public expenditure for example won't happen in USA too with equal magnitude and shelf life. Population, political setup, regional factors, international relations: everything plays its part