LC8: LearningCurve - Ch. 8: Inequality, Social Insurance, and Redistribution

_____ is provided by the government to insure people against unemployment, illness, disability, or lost savings.

Social insurance

From the data of the international comparison of income inequality, we can say that Denmark has _____ income inequality than Canada because _____.

lower; the Danish income gap is narrower

Which of the following is the share of income that the poorest quintile receives?

3.8%

The share of annual family income of the top two quintiles account for _____ % while the bottom two quintiles account for _____ % of the total income in the United States in 2017.

71.9; 13

Which of the following is NOT considered an effect of income inequality?

Income inequality decreases the racial gap in learning.

_____ refers to the cash-assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution.

The social-safety net

Which of the following is NOT considered an effect of income inequality?

Which of the following is NOT considered an effect of income inequality?

Which of the following is NOT considered an asset that contributes to your wealth?

Your health

People in long-term poverty represent _____ of the poor at any point in time and they often _____.

a large share; return to poverty

Each additional dollar yields _____ to your well-being than the previous one since you have diminishing marginal utility.

a smaller boost

When equality is measured in terms of outcomes, more equal outcomes:

are fairer.

The logic of redistribution is that it _____by redistributing money to the folks who can benefit most from it.

can raise total benefits

Utilitarians believe that government redistribution is beneficial because transferring $100 from a billionaire to a single mom at the bottom of the income distribution will:

lead to more utility in society.

The government tries to raise total well-being by equalizing the distribution of income. However, it involves the equality-efficiency trade-off meaning that:

more equal incomes may come at the cost of lower average incomes.

The _____ quintile has increased their share of income from 1970 to 2017.

richest

While redistribution of income may raise the total well-being in society, tax and redistribution programs distort incentives, thereby reducing work effort. Economists refer to this as:

the equity-efficiency trade-off.

Data shows that the well-being score is associated with a change in income. If we redistribute $25,000 from the rich to the poor:

the loss of utility from the rich is less than the gain to the poor.

From 1970 to 2017:

the rich got richer as their share of income grew faster than the other quintiles.

The poverty line was set using data on food purchases in 1955. Since families spent about a third of their incomes on food, the poverty line was set at:

three times the cost of a low-cost food plan.

Some families are lifted out of poverty:

through the combination of their earnings and government assistance.

Economists refer to your level of well-being as your:

utility.

Economists refer to _____ as your utility.

your level of well-being