Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 20, Problem 2PA
To determine
The difference percentage of children between the poor and rich families.
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In social welfare programs, there is no way to change either the benefit reduction rate or the benefit guarantee to simultaneously achieve all three goals of encouraging work, redistributing more income and lowering costs.
What is this dilemma called?
Although it is hard to separate the causes of poverty from the effects, there is no doubt that poverty is associated with various economic and social ills. Suppose that you were a policymaker in the government and your goal was to reduce the number of people living in poverty. How would you achieve this goal?
Dina and Charles are married, under the age of 65, and have two children under the age of 18. Charles works full time and earns $19,000, while Dina
works part time and earns $9,000. Thus, in total, their family income is $28,000. Are Charles and Dina living in poverty?
O Yes
O No
Suppose that Charles divorces Dina and leaves the family without paying alimony or child support. Dina must now support her two children alone, so
she begins working full time and earns a total of $18,000. Are Dina and her children living in poverty?
O Yes
O No
Again, consider Dina, a single mother with two children under 18 who earns an annual income of $18,000. Suppose that Dina qualifies for a welfare
program for single mothers that provides her with $4,000 in food assistance. After receiving welfare, is Dina's family living in poverty?
O Yes
O No
Chapter 20 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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- What are the pros and cons of a universal basic income (UBI) as an approach to fighting poverty? Where has UBI worked, and where do you think it has not? Have measures taken to deal with coronavirus changed perceptions of UBI?arrow_forwardPoverty and Income Distribution: End of Chapter Problems 4. Currently, the poverty threshold for a family of four is just over $25,000 a year. Among the given factors that affect poverty, indicate those that the official poverty threshold accounts for and those that it does not. Accounted for by the official poverty threshold Not accounted for by the official poverty threshold Answer Bank Differences in tax rates between different locales Inflation The cost of essential living expenses Changes in noncash benefits Geographical differences in the cost of livingarrow_forwardWhich of the following are reasons why high income inequality may be inefficient? Check all that apply. 0 0 High inequality may lead to an overinvestment in higher education at the expense of primary education High inequality limits access to credit for a larger share of the population Redistribution through progressive tax systems creates work disincentives and limits investment. Savings rates for the very wealthy tend to be lower than in the middle class High inequality reflects differences in skills and effort by workersarrow_forward
- Poverty is measured by the number of people who fall below a certain level of income—called the poverty line—that defines the income one needs for a basic standard of living. The official definition of the poverty line traces back to Group of answer choices A)The Great Depression B)Mollie Orshansky, whose idea was to define a poverty line based on the cost of a healthy diet. C)1953 and the ability to pay for housing and food. D)The 1965 cost of providing food, housing, and transportation.arrow_forwardWhat is a poverty trap? How could a household become stuck in a poverty trap? Give one paragraph (short) explanations for each of the above questions.arrow_forwardWhich of the following statements is not correct? Select one: a. The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. b. Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income. c. The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States. d. Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income.arrow_forward
- Suppose a government program guarantees $ 2,000 a month in income, even for those who do not work at all. However, if the recipient earns income by working, the benefit is reduced by 50 cents for each $1 earned. Which of the following statements is true? This program will redefine the proverty line. While the goal may be to reduce poverty, people rarely respond to incentives. This program will reduce the incentive to work significantly. The goal of this program is to increase the incentive to work, reducing the poverty trap.arrow_forwardWhich one of the following is the most likely to be associated with an increase in the incidence of poverty? A) The Gini coefficient falls substantially. B) The number of single persons with children and of single pensioners has increased substantially. C) The real income of those in the top 20% of income earners falls by 10%. D) The number of people earning below the level of income support has decreased.arrow_forwardComplete the following table to help you determine the poverty rate in Perkopia in 2019. To do this, begin by determining the total income of all individuals in each quintile using the fact that total annual income in the economy is $500,000,000. Next, determine the income of an individual in each quintile by dividing the total income of that quintile by the number of people in that quintile. (Hint: Recall that Perkopia has a population of 10,000 people.) Finally, determine whether the individual income for each quintile falls below the poverty line of $28,000. Quintile Share of Income in 2019 Total Income Individual Income Below Poverty Line? (Percent) (Dollars) (Dollars) Lowest 4.0 Second 10.0 Middle 16.0 Fourth 23.0 Highest 47.0 Using the information in this table, the poverty rate in Perkopia in 2019 is . Suppose that the government introduces a welfare program in…arrow_forward
- 1. Income inequality and the poverty rate The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2019, the poverty line is set at an annual income of $40,850 for an individual. A Share of Total Income in Perkopia (Percent) Year Lowest Quintile Second Quintile Middle Quintile Fourth Quintile Highest Quintile 2001 4.0 10.0 16.5 23.0 46.5 2007 3.8 9.7 15.0 22.5 49.0 2013 3.4 8.8 14.8 22.0 51.0 2019 3.0 8.2 14.0 21.8 53.0 The data in the table suggest that there was income inequality from 2001 to 2019.arrow_forward1. Income inequality and the poverty rate The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2004, the poverty line is set at an annual income of $25,300 for an individual. Note: This question uses quintiles, which are a statistical value of a data set that includes 20% of the population. This means that the population has been divided into fifths, where the first quintile is the lowest 20% of the values of the variable of interest, and so on to the fifth quintile, which is the highest 20% of the values. Year 1998 2004 2010 2016 Lowest Quintile 3.2 3.4 3.8 4.0 Share of Total Income in Perkopia (Percent) Middle Quintile Fourth Quintile Second Quintile 8.0 9.0 9.5 10.0 The data in the table suggest that there was 14.0 14.6 15.4 16.5 21.8 22.0 22.7 24.0 Highest Quintile 53.0 51.0…arrow_forwardMatch the scenario/description provided to the the type of poverty OR human development issue to which it best applies. - A. B. C. D. E. relative poverty - A. B. C. D. E. subjective poverty - A. B. C. D. E. absolute poverty - A. B. C. D. E. human development issue A. Mary’s grandson keeps tripping over nothing because the shoes she just bought him are two sizes too big. She couldn’t get him the ones that fit because he’ll outgrow them so fast and she has to have enough money left from her social security to get the electricity turned back on in the duplex. B. Education and literacy of women and girls, just like Mary, are a life chances that affect the levels of health in the overall…arrow_forward
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