Learning curve chapter 13

effective marginal tax rate.

As you earn more money, you may have to pay higher taxes and lose your benefits from the safety net. The sum of higher taxes and reduced benefits accruing from each dollar you earn is called the:

through the combination of their earnings and government assistance.

Some families are lifted out of poverty:

income inequality

The inequality in the United States can be measured by:

Single moms

Which of the following family structure is most likely to have the highest poverty rate?

Income redistribution

Which of the following is NOT considered a cost of redistribution?

the equity-efficiency trade-off.

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:

global income inequality

You can find the _____ by plotting the average annual income per person that is adjusted for the differences in the cost of living and for the proportion of the global population.

progressive tax

A system in which individuals with higher incomes pay a higher share of income in taxes is called a _____ system.

the minimum needed for human survival in modern times.

In a global perspective, the United Nations and the World Bank calculate an absolute poverty line of $1.90 per day based on:

The poverty line is adjusted and updated for inflation.

In the United States, the federal government set the poverty line based on food purchases in 1955. How does the government adjust the poverty line over time?

all the money you earn in a period of time, such as a year.

Income refers to:

focusing on what people spend.

Inequality in living standards is measured by:

one more dollar

Marginal utility refers to the additional utility you get from:

can compete on equal terms for higher incomes.

One view of fairness requires a level playing field such that people with the same native talents and ambition:

a large share; return to poverty

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

regular payments from workers and firms.

Social insurance programs, such as Social Security and Medicare, receive money through:

people tend to earn more as they get older and more experienced.

Some income inequality reflects differences between younger and older people because:

market earnings.

The U.S. official poverty rate calculation is based primarily on:

it tracks through time how many people are below an unchanging standard.

The advantage of the absolute standard approach is that:

somewhat arbitrary threshold.

The poverty line is a:

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

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:

lead to more utility in society.

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:

are fairer.

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

wealth

_____ is considered a stock, which is something that is measured at one specific time and represents the amount of money you have at that time.

false; the majority of people in poverty are not minorities

According to The Incidence of Poverty in the United States section, people living in poverty are mostly minorities. This statement is _____ because _____.

permanent income; annual income

Economists believe that your living standards largely reflect your _____ rather than your _____.

utility

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

high; hardly improve

People with low incomes tend to face _____ effective marginal tax rates. Therefore, their standards of living _____.

equalizing the distribution of income

Regarding the extreme cases of income redistribution, _____ refers to a smaller pie with a similar size for each slice.

opportunity cost principle

The _____ tells you that an important cost of working is what you must give up in order to work.

Social insurance

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

large; smaller

According to diminishing marginal utility, your marginal utility may be _____ when you are poor, and it becomes _____ when you are richer.

Yes, the distribution of income shows the disparate shares of family income among the quintiles.

Based on a wide range of information, is there any income inequality in the Unites States?

Find how much people in each equal-sized income group receive as a share of total income.

How do you find the distribution of income?

family income is below the poverty line.

In the United States, you are in poverty if your:

Supplemental Security Income.

The elderly and the disabled are protected by:

a relative measure.

The fact that the U.S. official poverty rate was initially set equal to half the median income of a family reflects the fact that the poverty line is:

can compete on equal terms with children from high-income families

The fairness that emphasizes equality of opportunity ensures that children from low-income families and disadvantaged communities:

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

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

can raise total benefits

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

both a relative and an absolute standard.

The official U.S. poverty line has features of:

poverty rate

The percent of the population that has a family income below the poverty line is referred to as the:

one-in-eight people were living in poverty.

The poverty rate in 2017 was 12.3 percent of the population, meaning that approximately:

proportional taxes

The taxes that fund most social insurance programs are _____ in which we all pay the same percentage of our income regardless of whether we earn a little or a lot.

people today with living standards from the 1950s.

The u.s government measures poverty by comparing:

tends to be large when you are poor, but it gets smaller as you get richer.

The well-being curve shows the average level of satisfaction at each level of income. The slope is quite high at low incomes, but is small at high incomes. This is because marginal benefit:

tax avoidance; tax evasion

When people try to make their income as low as possible, their actions involve legal _____ and illegal _____.

wages; your time and loss of in-kind benefits

When you apply the cost-benefit principle to your decision to work, the benefit of work is _____ while the cost of work includes _____.

Absolute poverty

_____ refers to the poverty line that measures whether your basic needs are met, assuming a universal, time-invariant standard for basic needs.