Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 20, Problem 6CQQ
To determine
The impact of phase out of anti-poverty benefits when income increases.
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Antipoverty programs are often set up so that the amount of government benefits
will decline substantially as poor people earn more income. This can cause
a poverty trap
an income inequity
a poverty line
a safety net
If the benefits from an antipoverty program are phasedout as an individual’s income increases, the program willa. encourage greater work effort from the poor.b. lead to an excess supply of labor among unskilledworkers.c. cost the government more than a program thatbenefits everyone.d. increase the effective marginal tax rate that thepoor face.
1. A government economist, Mollie Orshanky, first calculated this in 1963 by multiplying the cost of a very minimal diet by 3, as a 1955 government study had determined that the typical American family spent 1/3 of its income on food.
Group of answer choices
a. episodic poverty
b. popularity index
c. welfare line
d. poverty line
Chapter 20 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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Similar questions
- The Earned Income Tax Credit (EITC) is a way of subsidizing those who are unable to work and have no earnings. true or false? a. true b. falsearrow_forwardThe income threshold used by the organization International Poverty Line for extreme poverty a. Is a guideline for policy makers and not an exact “tipping point” at which point a person falls into extreme poverty. b. Is adjusted for price differences across countries. c. Is one of several thresholds sometimes used to discuss poverty that show that the percentage of people living in poverty has been declining in recent decades. d. Is agreed on by all organizations working on poverty. e. All of the above except d.arrow_forwardIs work on the part of welfare recipients a reasonable expectation? Does government have any business getting involved in the personal lives of welfare recipients?arrow_forward
- Most of the government's mandatory spending is used on which of the following? A) social security B) income security C) medicaid D) veteran's benefitsarrow_forwardWhat is "Pareto Efficiency"? This is a key concept in welfare economics. Write at least a paragraph to describe this concept and give some examples.arrow_forwardChoices to each part attached:arrow_forward
- In the government of a country's budget the finance minister proposed to raise the tax on cigarettes. He also proposed to increase income tax on individuals earning more than $100,000 per annum. What possible welfare objective can you think of from these proposals?arrow_forwardSuggest a relevant government policy that would help with tax dodgersarrow_forwardPoverty Trap 7. The American Poverty Trap is a phrase used to describe the tendency for individuals below the poverty line to remain there due to the structure of America's safety-net income stabilization programs. 8. The issue is that federal and state benefits decline as a worker goes from being unemployed to becoming fully employed. As earned income increases, the amount of benefits fall. 9. Thus, the marginal benefit of working is increased income, but the marginal cost includes declining benefits, and a loss of leisure time. 10. Federal and state programs are designed so that as the worker nears the poverty line, the increase in income is matched by a decline in benefits. 11. Thus, the worker gains very little by working more! This structure is actually a disincentive to work. 12. What would be a better solution? End all poverty programs? Provide all citizens a poverty level income stipend? What do you think? What have you been told is the way to avoid being trapped in poverty? D…arrow_forward
- what would happen if Governments increase the level of welfare payments.arrow_forwardGovernment introduces a new income guarantee program for low-income families. Consider the program with an income guarantee of $5000 and a benefit reduction rate of 25%. A person can work up to 2,000 hours per year at $15 per hour. a. Draw the person's budget constraint without and with the income guarantee. Label as many things as you humanly can. b. Who would be affected by this program and who would not (use yearly income and number of hours worked to describe the affected and unaffected groups)?arrow_forwardTo what extent can the government improve economic situation by changing theinterest rate?arrow_forward
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