Chapter 21: Poverty, Inequality, and Discrimination

he most common international poverty measure is the number of people living on less than

$1.90

The percent of the population living under the official federal poverty line in the United States was approximately _____ percent in 2014.

15

Defining poverty as income below a certain amount, fixed at a given point in time, is using a(n) _____ poverty line.

absolute

The most common international poverty measure is the number of people living on less than $_____ per day, which is _____ than the official U.S. poverty line.

- 1.90 - lower

Research suggests that only about _____ percent of people living under the poverty line in any given year are _____ poor.

- 3 - chronically

In the case of the labor market, we often see that women earn less than men. From this, we can conclude which of the following?

- An omitted variable is possibly responsible for the variation - Income is correlated with gender

Which of the following is correct?

- Under some conditions, markets may help to eliminate discrimination. - Discrimination can be consistent with an efficient market.

When we consider the income differences between men and women, we have to be careful not to confuse _____ with _____.

- correlation - causation

_____ can have long-lasting effects on people and markets, even after the active _____ itself ends.

- discrimination - discrimination

The goal of _____ _____ is not only the immediate effect of the policy on poverty but also the growth it will produce for the entire economy in the future.

- economic - development

Because income is not distributed perfectly equally anywhere in the world, the top quintiles earn a disproportionately _____ share of income and the lower quintiles earn a disproportionately _____ share of income.

- high - low

Because income is not distributed perfectly equally anywhere in the world, the top quintiles earn a disproportionately _____ share of income and the lower quintiles earn a disproportionately ______ share of income.

- high - low

People who grow up in poor families or communities are likely to have reduced opportunities to acquire _____ _____.

- human - capital

The simplest method of summarizing _____ _____ divides households into five equally sized groups.

- income - distribution

The ability to improve one's economic circumstances over time is known as _____ _____.

- income - mobility

_____ insurance programs are similar to _____ insurance programs in that they pool risks across a large population.

- private - social

The design of the _____ U.S. federal income tax system has the effect of reducing income inequality: Those with _____ income pay a larger proportion of their income than those with _____ income.

- progressive - higher - lower

Policies that benefit the poor may _____ resources with the explicit purpose of reducing chronic poverty or lessening income inequality.

- redistribute - reallocate

We can distinguish among three different types of public policy approaches related to poverty and inequality:

- safety nets - economic development - redistribution of resources

Transient poverty is usually measured as a spell of poverty that lasts at least _____ consecutive months within a year.

2

When dividing a population into five groups, each group represents _____ percent of the population.

20

In the United States, the poverty line was set in the 1960s by taking the cost of food for a family of a given size and multiplying it by

3

Prior to 1996, the federal government administered a program called _____ which gave money to poor households with children.

Aid to Families with Dependent Children

Whenever receipt of _____ is tied to income, the incentive to seek out more work and higher pay is reduced at least somewhat.

benefits

An absolute poverty threshold is usually set based on the

cost of certain essential goods.

The purchasing power parity index accounts for differences in the price of goods across _____.

countries

Economists think about _____ as the practice of making choices using generalizations based on observable characteristics to fill in missing information.

discrimination

The lingering effects of historical _____ can affect new generations because people's chances in life are affected by the human capital of those around them.

discrimination

The practice of making choices using generalizations based on observable characteristics to fill in missing information is _____.

discrimination

Under some conditions, markets may help to eliminate _____; under other circumstances, it can be consistent with an efficient market.

discrimination

The practice of making choices using generalizations based on observable characteristics to fill in missing information is called

discrimination.

Programs that policy makers believe will act as investments in future economic growth can be grouped under the category

economic development.

The poverty rate is the percentage of the population that

falls below the absolute poverty line.

The simplest method of summarizing income distribution divides households into _____ equally sized groups.

five

In the United States, the official poverty line is based on the price of

food

People who grow up in poor families are more likely to be poor because the parents

have limited resources to pass along.

You acquire _____ capital by getting a good education, being healthy, and gaining experience in jobs, but also by watching and learning from the people around you.

human

One way to consider the relationship between inequality and opportunities is to look at

income mobility.

A relative poverty line defines poverty in terms of

income of the rest of the population.

Means-testing can also create perverse incentives because recipients have an incentive to

limit their means in order to receive benefits.

People who grow up in poor families are

more likely to be poor.

The percentage of the population that falls below the absolute poverty line is the

poverty rate.

The design of the U.S. federal income tax system is _____, charging lower rates to those with lower incomes.

progressive

Accounting for differences in the price of goods across countries is done using a tool called the

purchasing power parity index.

A _____ represents 20 percent of the population.

quintile

Homeless shelters and food banks are examples of programs designed to _____ resources.

redistribute

A(n) _____ poverty measure is not directly tied to the cost of living.

relative

Government programs under which people pay into a common pool and are eligible to draw on benefits under certain circumstances is referred to as _____ insurance.

social

Important examples of _____ insurance programs in the United States include unemployment insurance, Social Security, and Medicare.

social

Government programs under which people pay into a common pool and are eligible to draw on benefits under certain circumstances is referred to as

social insurance.

Economic development, safety nets, and redistribution of resources are

three different types of public policy approaches related to poverty and inequality.

More than a quarter of the population experiences _____ poverty at some point in their lives, perhaps due to losing a job or experiencing sickness or injury.

transient

Aid to Families with Dependent Children was an _____ cash-transfer program because it provided financial support to any eligible person without any stipulations on how the money could be used.

unconditional

Programs that describe a(n) _____ range from food stamps that help the poor buy food to Head Start, an early education program.

welfare state

The basics of the _____ started in the United States during the Great Depression when the government rolled out a variety of programs, including Social Security and the Civilian Conservation Corps, which were intended to help the large rolls of poor and unemployed.

welfare state