Question 1

Government transfers may indirectly decrease the income of the poor by reducing work effort.

Accepted Answer

This is based on the concept of the "welfare trap," which suggests that government transfers can create a disincentive to work, particularly for those in poverty, as they may no longer need to rely on work as their primary source of income. This can lead to a decrease in work effort among the poor, ultimately reducing their overall income. However, it's worth noting that this isn't always the case, as there are many other factors that can influence work effort and income.

Question 2

The benefit reduction rate is the rate at which a recipient's benefits decline as income increases.

Accepted Answer

The benefit reduction rate refers to the rate at which a recipient's benefits decrease as their income increases. This means that the more income a recipient earns, the less they may receive in benefits.

Question 3

Unemployment plays only a minor role in maintaining high poverty rates among African-Americans.

Accepted Answer

Unemployment is a significant factor in the high poverty rates among African-Americans. The unemployment rate for African-Americans is consistently higher than the overall unemployment rate, which contributes to lower incomes and higher poverty rates. Additionally, structural racism and discrimination in hiring and promotion can limit job opportunities and contribute to persistent poverty.

Question 4

When an individual's resources are not sufficient to provide a minimum standard of living, they are considered poor.

Accepted Answer

This is the commonly accepted definition of poverty - when an individual or household does not have enough resources to meet their basic needs for food, shelter, and other necessities.

Question 5

The official poverty line is the cost of housing multiplied by three.

Accepted Answer

The official poverty line is calculated based on the cost of a minimum food budget multiplied by three, not the cost of housing.

Question 6

Labor market discrimination is a major factor in explaining why poverty is concentrated in some groups in society.

Accepted Answer

The answer of Labor market discrimination is a major factor...

Question 7

The official poverty threshold is the annual cost of a nutritionally adequate diet multiplied by two.

Accepted Answer

The official poverty threshold is based on income level and household size, and is determined by the U.S. Census Bureau. It is not solely based on the cost of a nutritionally adequate diet.

Question 8

Increasing unemployment, the changing composition of the poverty population, and the effects of government transfers on work incentives all contribute to the increase in the pre-transfer poverty rate.

Accepted Answer

Increasing unemployment means fewer people have jobs and therefore have less income, contributing to the pre-transfer poverty rate. The changing composition of the poverty population refers to shifts in demographics, such as an increase in single-parent households or elderly individuals, who may be more likely to experience poverty. Government transfers, such as welfare or food stamps, can provide a safety net for those in need, but may also reduce work incentives for some recipients. These factors all contribute to the increase in the pre-transfer poverty rate.

Question 9

Policies aimed at reducing labor market discrimination would significantly reduce poverty in the United States.

Accepted Answer

The answer of Policies aimed at reducing labor market discrimination...

Question 10

Transfers reduce work effort because they reduce the opportunity cost of leisure.

Accepted Answer

Transfers provide individuals with additional income that they can use to purchase more leisure time, thereby reducing the opportunity cost of that leisure time as the individual is not sacrificing as much income to take time off. This can lead to a decrease in work effort as individuals may choose to work fewer hours or take longer periods of time off.

Question 11

The poverty rates for people living in black and Hispanic households fell both absolutely and relative to the poverty rate in white, non-Hispanic families in the 1990s.

Accepted Answer

According to data from the US Census Bureau, both black and Hispanic poverty rates fell in the 1990s and declined relative to the poverty rate in white, non-Hispanic households.

Question 12

The government adjusts the poverty threshold each year for changes in the Consumer Price Index.

Accepted Answer

The poverty threshold is adjusted for inflation each year using the Consumer Price Index (CPI) to account for changes in the cost of living.

Question 13

In general, the greater the break-even net income relative to the poverty threshold, the greater the target efficiency of a program.

Accepted Answer

The break-even net income relative to the poverty threshold does not directly determine the target efficiency of a program. Target efficiency is more about how well a program reaches and benefits its intended recipients, not just the income levels involved.

Question 14

The poverty rate for the elderly has declined significantly over the past 35 years, falling below the all-ages poverty rate by 1982.

Accepted Answer

According to the U.S. Census Bureau, the poverty rate for the elderly has indeed declined significantly and was lower than the all-ages poverty rate by 1982.

Question 15

There is evidence that earnings differentials between white males and others is less among individuals with less education.

Accepted Answer

Studies have shown that the earnings gap between white males and other groups (such as women and people of color) is smaller among individuals with lower levels of education. This may be due to the fact that education is a more powerful factor in determining earnings than race or gender, particularly at lower levels of education. However, even among individuals with similar levels of education, there are still significant earnings gaps between different groups.

Question 16

Many economists feel that the official measure of poverty overstates the number of poor because it does not include relevant and important sources of income.

Accepted Answer

Many economists argue that the official measure of poverty, which is based solely on income, does not take into account other sources of support like government subsidies, tax credits, and non-cash benefits like food stamps or housing vouchers. Therefore, they believe the official measure overstates the number of poor.

Question 17

Over the past 40 years, there has been a significant reduction in the poverty rate for persons living in female-headed families.

Accepted Answer

According to data from the U.S. Census Bureau, the poverty rate for persons living in female-headed families has decreased from 50.3% in 1974 to 26.8% in 2019. This represents a significant reduction in the poverty rate over the past 40 years.

Question 18

If a family's money income is less than its relevant poverty threshold, only the children in the family are counted as poor.

Accepted Answer

According to the official poverty measure used by the U.S. government, if a family's money income is less than its relevant poverty threshold, all members of the family are considered to be living in poverty. The poverty threshold is determined based on the size and composition of the family.

Question 19

Since 1973, poverty has generally increased in the United States.

Accepted Answer

According to data from the U.S. Census Bureau, poverty rates in the United States increased from 11.1% in 1973 to 11.8% in 2018, with some fluctuations in between. Therefore, poverty has generally increased in the United States since 1973.

Question 20

According to the federal government's official measure, the U.S. poverty rate was at 9 percent in 2007

Accepted Answer

According to the U.S. Census Bureau, the official poverty rate in 2007 was about 12.5 percent, not 9 percent.

Quiz 11: Poverty: Old and New Approaches to a Persistent Problem