MACRO Econ Chapter 8: Inequality, Social Insurance, and Redistribution

It is estimated that 90 percent of the money that is being redistributed is lost to "leaks" such as administrative costs. If $25,000 is redistributed from a family in the highest quintile (earning $190,000) to a family in the lowest quintile (who earned only $15,000), how much money will actually be received by the family in the lowest quintile?

$2,500 (0.1 * 25000)

_____ judges the adequacy of resources relative to an unchanging standard.

Absolute poverty

Which of the following is TRUE about a spell of poverty?

Around half of spells of poverty last less than a year.

How do you find the distribution of income?

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

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

Income redistribution

The elderly and the disabled are protected by:

Supplemental Security Income.

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

are fairer.

Because the private insurance market _____ that everyone can get certain forms of insurance, the government steps in and social insurance is provided by _____.

fails to ensure; taxpayers

Some safety net programs are _____ because they are insurance programs designed to cover everyone—the rich and the poor.

not means-tested

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.

proportional taxes

When children lose a parent, they receive Social Security benefits to help support them until they turn 18. This means that Social Security:

provides life insurance to parents.

Data shows that the United States has less intergenerational mobility than Germany. That means that:

the success of U.S. children depends more on parents' economic status than the success of German children does.