You are expected to explain/analyze (AO2) and draw (AO4) the poverty cycle (SL+HL)
I have reveived feedback from students saying this diagram is incorrect. It is not. It may deviate from what is taught in the classroom/your textbook, but this diagram is one correct interpretation (there are many ways to draw the diagram, this is one of them) of the syllabus and is used in the Hodder textbook which is approved by the IB. For clarity's sake, however, I will soon replace it with another version.
This is a poverty cycle.
A poverty cycle shows how being poverty will result in entrapment in poverty, from one generation to the next.
You will be expected to both explain how the cycle works as well as draw it. The syllabus says all you need is "any linked combination of factors that perpetuate poverty". This is one such cycle, used by the IB approved Hodder textbook, so it is correct.
No basic education
= You will not find high-paying jobs
= You will have little money left
= You will have little to invest (in yourself or in others)
= You will have a low productivity
= You will be unable to attain a basic education
and so on