Question 1

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income)- 10,000.A family that earns an income of $30,000 will

Accepted Answer

The answer of Assume that the government proposes a negative...

Question 2

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 *Income)- 10,000.If a family doesn't earn any income,how does the negative income tax affect them?

Accepted Answer

If a family doesn't earn any income, the calculated taxes owed would be ($1/3 * $0) - $10,000, which equals -$10,000. This means they would receive an income subsidy of $10,000.

Question 3

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income)- 10,000.A family that earns an income of $60,000 will

Accepted Answer

For an income of $60,000, Taxes Owed = (1/3 * 60,000) - 10,000 = 20,000 - 10,000 = 10,000. Thus, the family will pay $10,000 in taxes.

Question 4

Which of the following statements about the minimum wage is correct?

Accepted Answer

Advocates of the minimum wage argue that the demand for labor is relatively inelastic, meaning that employers cannot easily decrease the number of workers they hire in response to an increase in wages. This allows for workers to earn a higher wage without facing significant job losses. Option A is incorrect as an increase in minimum wage may not benefit all unskilled workers, as some may lose their jobs if employers cannot afford to pay the higher wage. Option B is incorrect as an increase in the minimum wage can indirectly affect the well-being of middle-class families if businesses increase prices to offset the higher labor costs. Option D is incorrect as the cost of the minimum wage is borne primarily by employers and not the government.

Question 5

A negative income tax system would

Accepted Answer

A negative income tax system collects taxes from high-income households and provides transfers (or payments) to low-income households, making it a form of income redistribution. It does not eliminate progressive tax rates, but rather adjusts them based on income level. Overall, it aims to reduce poverty and inequality.

Question 6

An example of an in-kind transfer to the poor is

Accepted Answer

Medicaid is an in-kind transfer to the poor because it provides them with access to healthcare services, rather than giving them cash or vouchers that they can use to purchase healthcare. The other options listed (negative income tax, EITC, TANF) are all cash transfers.

Question 7

Which of the following is an advantage of an in-kind transfer in comparison to a cash payment?

Accepted Answer

In-kind transfers restrict the use of the benefit, thus ensuring that recipients receive necessities such as food and health care. This can be seen as an advantage as it ensures that the transfer is being used for its intended purpose, rather than potentially being misused on non-essential goods or services.

Question 8

In-kind transfers are politically popular because

Accepted Answer

In-kind transfers, such as providing food stamps or subsidized housing, are popular among the public because they address basic needs and it is perceived that the aid is not going to support addictions. This helps alleviate concerns about misuse of funds and helps build public support for such programs.

Question 9

A tax provision that works much like a negative income tax is the

Accepted Answer

The Earned Income Tax Credit (EITC) is a tax credit for low- to moderate-income working individuals and couples, particularly those with children. It operates much like a negative income tax, as it provides a credit to individuals and families that effectively reduces their federal income tax liability to zero or even provides a refund if the credit exceeds their tax liability.

Question 10

The only qualification to receive government assistance under a negative income tax is

Accepted Answer

The only qualification to receive government assistance under a negative income tax is a low income, meaning individuals or households earning below a certain threshold would receive payments from the government to lift them above the poverty line. The other options (pre-school children, job training, and working head-of-household) may be factors considered in other welfare programs, but not for negative income tax.

Question 11

The U.S.welfare system was revised by a 1996 law that

Accepted Answer

The 1996 law that revised the U.S. welfare system, known as the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), did indeed limit the amount of time that people could receive assistance. Prior to PRWORA, there was no federal time limit on receiving benefits, but PRWORA instituted a lifetime limit of five years for federally funded assistance. This was intended to encourage recipients to become self-sufficient and to reduce long-term reliance on welfare programs.

Question 12

Relative to direct cash payments,in-kind transfers have the advantage of being

Accepted Answer

The answer of Relative to direct cash payments,in-kind transfers have...

Question 13

Which of the following statements is not correct?

Accepted Answer

Education is often valued in poor countries, but economic necessity forces children to work instead of attending school.

Question 14

Eric V.Edmonds,an economist who has studied child labor issues,asserts that

Accepted Answer

Eric V. Edmonds argues that policies aimed at curbing child labor can inadvertently harm the poorest families by removing a source of income, thus "punishing the poorest for being poor."

Question 15

Which of the following is not a characteristic of the Earned Income Tax Credit (EITC)?

Accepted Answer

The Earned Income Tax Credit (EITC) is a tax credit that benefits low and moderate-income workers. It is designed to incentivize work and reduce poverty, so it applies only to those who are working. While the credit may help certain individuals with disabilities who are able to work, it is not specifically targeted at those who cannot work due to a disability. Therefore, option C is not a characteristic of the EITC.

Question 16

Poor families are eligible for financial assistance,without having to demonstrate any additional "need,"

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The answer of Poor families are eligible for financial assistance,without...

Question 17

Which of the following formulas is most representative of a negative income tax proposal?

Accepted Answer

The answer of Which of the following formulas is most...

Question 18

Medicaid and food stamps are

Accepted Answer

Both Medicaid and food stamps are forms of in-kind assistance, meaning they provide specific goods or services instead of cash. Medicaid provides healthcare services and food stamps provide assistance with purchasing food. They are not forms of cash assistance or only available to the elderly. They are transfer payments in that the government transfers funds from taxpayers to those receiving assistance, but this is not the most accurate or specific answer to the question.

Question 19

Which of the following is most likely to explain why young children in developing countries often work?

Accepted Answer

Children in developing countries often work because their families are in poverty and need the additional income.

Question 20

For which of the following programs can a person qualify solely by having a low income?

Accepted Answer

The answer of For which of the following programs can...

Quiz 20: Income Inequality and Poverty

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income) - 10,000.A family that earns an income of $30,000 will

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 *Income) - 10,000.If a family doesn't earn any income,how does the negative income tax affect them?

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income) - 10,000.A family that earns an income of $60,000 will