Deck 4: Poverty and Income Inequality: Measures and Trends

Question 1

What statement best characterizes absolute poverty?

A) It depends on the larger economic context.
B) It is relative to what other people earn.
C) It changes as national income grows.
D) It includes a metric that focuses on the minimum amount of resources required to survive.
E) It is the indicator most commonly used to measure "First World" poverty.

Answer 1

D

Question 2

Which of the following is not a criticism of relative poverty measures?

A) They underestimate the amount of poverty in Canada.
B) They take into account resources that are not necessities.
C) They establish a standard for what is "expected" or considered "normal" in a society.
D) They are arbitrary and subjective.
E) They are overly generous.

Answer 2

A

Question 3

Why is it argued that choosing any poverty indicator makes debates about poverty contentious, highly political and perhaps unresolvable?

A) Choosing any poverty indicator tends to involve a value judgement.
B) They pit different scientific approaches against one another.
C) Once selected, any poverty indicator will tend to shift within a debate.
D) Canadians are consistently unconcerned with the poverty problem.
E) Pressure on government to act will be consistent regardless of measure.

Answer 3

A

Question 4

Which of the following does not factor into the calculation of the low-income cut-off (LICO)?

A) Household size
B) Community Size
C) Year
D) Age of family members
E) Income

Question 5

Most of Canada's economic and social data are collected by what government agency?

A) Human Resources and Skills Development Canada (HRSDC)
B) Statistics Canada
C) Canadian Centre for Social Development (CCSD)
D) Bank of Canada
E) Canada Revenue Agency (CRA)

Question 6

The low-income cut-off (LICO) is set to the income level where families spend what percentage of their after-tax income on necessities?

A) 30 percent
B) 52 percent
C) 63 percent
D) 73 percent
E) 85 percent

Question 7

What group constitutes the largest proportion of low-income Canadians?

A) Single adults over the age of 65
B) Single adults under the age of 65
C) Children in two-parent families
D) Children in single, female-headed households
E) Families with six members or more

Question 8

What conclusion is best supported by analyzing the LICO and the LIM since the 1970s in Canada?

A) Canada's poor have become relatively worse off.
B) Canada's poor have become relatively better off.
C) Canada's wealthy have become relatively worse off.
D) Canada's wealthy have become relatively better off.
E) There is no sustained trend showing Canada's poor have become relatively worse off or better off.

Question 9

What share of income would be allotted to the middle quintile if income were distributed perfectly equitably in Canada?

A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent
E) 50 percent

Question 10

What is the most common way to measure income distribution?

A) Divide the population into equal size groups and examine each group's distance from the median income
B) Divide the population into equal size groups and examine each group's relative share of the total income
C) Determine the income level where families spend a certain percentage of their after-tax income on necessities
D) Measure each individual's income as a function of their distance from the average Canadian income
E) Plot average Canadian family income over time, controlling for inflation

Question 11

Which quintile was the only grouping that saw a substantial increase in its share of the national income between 1951 and 2017?

A) Highest quintile
B) Fourth quintile
C) Middle quintile
D) Second quintile
E) Lowest quintile

Question 12

What best explains the recent upward redistribution of the gains of economic expansion in Canada?

A) High-income earners work more hours than others.
B) High-income workers make more of their income from investments.
C) Wages are less generous for the middle-class workers.
D) There are too many qualified people relative to the number of highly skilled occupations.
E) Low-income earners are more likely to retire early.

Question 13

Which of the following is not a component of market-based income?

A) Earnings from real estate holdings
B) Wages
C) Earnings from stock market dividends
D) Employment insurance
E) Earnings from private pension plans

Question 14

Which of the following explains the differences in the proportion of income paid in consumption taxes between low-earning and high-earning families?

A) Due to luxury goods, families in high-income brackets tend to spend more of their income than lower-income families.
B) Wealthy families can afford to pay the taxes for their children's university education.
C) Families from high-income brackets buy more expensive used homes than lower-income families.
D) Families from lower-income brackets save by not having to pay consumption taxes on savings or income.
E) Families from lower-income brackets are forced to spend most of their income on food, shelter, and clothing.

Question 15

Which country has the most equitable distribution of national income?

A) Japan
B) Sweden
C) Germany
D) Canada
E) Brazil

Question 16

What pattern is revealed by countries such as Russia, South Africa, and the Czech Republic that underwent transformational change in the last few decades?

A) Income can be distributed in a myriad of ways and follows no predetermined pattern.
B) Radical political and social change always results in greater inequality.
C) Radical political and social change always results in greater equality.
D) The transition from socialism results in inequality, apartheid equality.
E) The transition from apartheid results in greater equality, socialism inequality.

Question 17

Hewitt (1977) questions the efficacy of the Canadian welfare state on the basis of what evidence?

A) Increasing women's participation in the labour force
B) The stability of the distribution of income in Canada since the middle of the 20^th century
C) The decline in industrial employment
D) The emergence of the post-industrial economy
E) The heightened poverty rates

Question 18

Why have income shares among quintiles stayed so consistent over the years?

A) Income transfers through social programs have kept pace with declines in market income.
B) The government is ineffective at stimulating redistribution.
C) Market-based incomes have accrued consistently to all income quintiles.
D) Government has "crowded-out" the free market with social spending.
E) Canada has shifted to a post-industrial economy that contains more jobs for highly-skilled professionals.

Question 19

Which of the following is a measurement for relative poverty that is used by international organizations?

A) Low-income cut-off (LICO)
B) Welfare state
C) The market basket measure (MBM)
D) Low-income measure (LIM)
E) None of the above

Question 20

Real income growth for families from the 1950s through the 1970s is a reflection of what?

A) A period of sustained and unprecedented expansion in Canada's economy
B) A period of unsustained and unprecedented expansion in Canada's economy
C) Stagnation of the workforce despite increasing numbers of women in the workforce
D) Decreasing productivity
E) What a household can purchase at the store

Question 21

During the first two months of the pandemic, American billionaires, like Jeff Bezos and Mark Zuckerberg, whose respective wealth grew by how much?

A) $34.6 billion and $25 billion, respectively
B) It declined by $34.6 billion and $25 billion, respectively
C) 20% and 4.1%
D) It declined by 20% and 4.1$, respectively
E) Their respective wealth did not grow during the first two months of the pandemic

Question 22

What is the most common way of presenting quintiles?

A) By total income
B) By total consumption
C) By total government transfers
D) Low-income cut-off (LICO)
E) Market basket measure (MBM)

Question 23

Government transfers do not include:

A) Pension
B) Employment insurance programs
C) Social assistance
D) Bi-weekly earnings paycheck
E) Subsidies

Question 24

What kind of earnings are commonly obtained in the bottom quintile and not as common in the top quintile?

A) Real estate holdings
B) Professional salaries
C) Stock market dividends
D) Cryptocurrency
E) Government transfers

Question 25

Why do some fear the elimination or reduction of social programs?

A) Taxes would be higher.
B) It would alter the distribution of income, only minimally affecting the people of the highest quintile.
C) It would alter the distribution of income, only minimally affecting the people of the lowest quintile.
D) It would drastically alter the distribution of income and directly affect the people of the highest quintile.
E) It would drastically alter the distribution of income and directly affect the people of the lowest quintile.

Question 26

Income statistics tend to ignore:

A) Costs associated with health and education
B) Real estate holdings
C) Stock market dividends
D) Government transfers
E) Taxes

Question 27

The service-based industries the most financially impacted by the pandemic do not include:

A) Hotels
B) Restaurants
C) Large grocery chains (e.g., Loblaws)
D) Hair salons
E) Tourism

Question 28

High-income earners are more likely to own homes and send their children to university, and are benefiting from tax exemptions. Low-income earners have less opportunity to take advantage of:

A) Unrecognized tax breaks
B) Public transport
C) New infrastructure
D) Canada Emergency Response Benefit (CERB)
E) Voting

Question 29

Canada's economy has historically followed boom and bust cycles that affect all Canadians equally.

Question 30

Personal and journalistic accounts are the best approach to looking at inequality.

Question 31

In Canada today not having an Internet connection at home is an indicator of relative poverty.

Question 32

The difference between measures of absolute poverty and relative poverty are the difference between mere survival and a healthy existence.

Question 33

Relative poverty lines have failed to gather much credence in Canada, which most discussions focussing on the absolute well-being of low-income Canadians.

Question 34

The low-income cut-off differs from other poverty measures in that it focuses on consumption rather than income.

Question 35

The low-income cut-off, according to Statistics Canada, constitutes the de facto poverty line.

Question 36

Families are better able to avoid poverty than are individuals.

Question 37

The only discernable fluctuations in poverty rates in Canada are triggered by the recessions of 1981, 1990, and 2008.

Question 38

In the 1980s, family earnings began to increase as more women entered the workforce.

Question 39

There has been a gradual income shift from the highest quintile to the three middle quintiles in Canada from 1951 to 2011.

Question 40

Between 1951 and 2001, the top quintile was the only grouping that saw a substantial increase in its share of the national income.

Question 41

High-income professionals are increasingly marrying outside of their status group, causing a downward redistribution of income.

Question 42

Factoring in the distinction between market income and income from transfer does not cause significant changes in the distribution of national income among quintiles.

Question 43

Low-income families pay a greater share of their income in consumption taxes than higher-income families.

Question 44

Low-income earners are more likely to benefit from exemptions to consumption taxes.

Question 45

Taking both income and consumption tax into account the overall redistribution effect of the Canadian taxation system is strong and positive.

Question 46

When looking at the share of income distributed to the lowest quintile, it is clear that Canada is more redistributive than Sweden.

Question 47

The "Brazilianization" of our economy refers to the greater equality that characterizes Brazil due in large part to its extensive welfare state.

Question 48

Income distribution in Canada has remained more or less constant for a half-century, despite greater government involvement.

Question 49

Income distribution in Canada has remained relatively uniform because of the welfare state, not in spite of it.

Question 50

The absolute poverty line does not change as national income grows.

Question 51

The advantage of having a single institution collect low-income data is that the data are consistent and reliable year after year, enabling accurate assessments of change over time.

Question 52

Statistics Canada insists that the low-income cut-off (LICO) constitutes a poverty line.

Question 53

The low-income measure (LIM) is not as simple nor as intuitive to calculate as the low-income cut-off (LICO) and market-basket measure

Question 54

Focusing only on the poverty line will overlook how the remaining majority of Canada's national income is distributed.

Question 55

From the 1950s through the late 1970s, Canadian individuals and families experienced declining income.

Question 56

In the early 1980s, earnings began to stagnate in Canada.

Question 57

Many middle-income Canadians are feeling that it is increasingly difficult to maintain their standard of living.

Question 58

Rising unemployment rates often hurt lower income people more because they live from paycheck to paycheck, and have a harder time managing the situation compared to individuals of high income who can rely on savings.

Question 59

The COVID-19 pandemic has been exacerbating pre-existing social inequalities.

Question 60

What is a consumption tax? How does it differ from an income tax?

Question 61

How is absolute poverty measured? Outline one critique and one support of this measure.

Question 62

What is "Brazilianization"? What might cause Canada's economy to change in this fashion?

Question 63

Explain the functions of the low-income cut-off (LICO), the market basket measure (MBM), and the low-income measure (LIM).

Question 64

What are the different approaches to measuring poverty? Which approach is used in Canada? Using information from your textbook, outline the challenges to each approach.

Question 65

How do we measure the distribution of earned income in Canada? Why do we require a measure of distribution? What pattern emerges in the distribution of income in Canada?

Question 66

What is the redistributive effect of the welfare state? How does this effect change when all sources of government revenue are considered? Why?

Question 67

What is the difference between relative poverty line and the absolute poverty line? Explain their differences based on the course material and provide examples.

Question 68

Explain the use of quintiles to measure income distribution. In 2017, what was the composition of the top and bottom quintiles in Canada?

Question 69

Consider Table 4.2. From 1951-2017, discuss how income shares have changed over this period.

Question 70

Refer to Table 4.1 in your textbook and find the low-income cut-off for your situation. What is the income level? What would living below that cut-off look like?

Question 71

What measurement of poverty do you find most suitable for use in Canada in the twenty-first century? Why? How is your perspective shaped by the politicization of poverty in Canada?

Question 72

Do you feel that the state should change how it collects taxes? Should we make our income taxes more progressive or should we shift to a system based entirely on consumption?

Question 73

How are you enmeshed in the Canadian welfare state? How would your life change if we didn't have one?

Question 74

Think about the kinds of government transfers that are typically distributed to lower-income families such as, social assistance and employment insurance programs. How do these help families and individuals in Canada? What effects might this have if these transfers ceased to be distributed?