Chapter 20 - Income Inequality and Poverty

Question 1

Poverty Line

Answer 1

• an absolute level of income set by the federal government for each family size, below which a family is deemed to be in poverty

Question 2

Poverty Rate

Answer 2

• the percentage of the population whose family income falls below an absolute level (i.e. the poverty line)

Question 3

In-Kind Transfers

Answer 3

• transfers to the poor given in the form of goods and services rather than cash

Question 4

life cycle

Answer 4

• the regular patter of income variation over a person’s life

Question 5

Permanent Income

Answer 5

• a person’s normal income

Question 6

Utilitarianism

Answer 6

• the government should choose policies to maximize the total utility of everyone in society

Question 7

Utility

Answer 7

• a measure of happiness or satisfaction

Question 8

Liberalism

Answer 8

• the government should choose policies deemed to be just as evaluated by an impartial observer behind a “veil of ignorance”

Question 9

Maximin Criterio

Answer 9

• claim that a government should aim to maximize the well-being of the worst-off person in society

Question 10

Libertarianism

Answer 10

• the government should punish crimes and enforce voluntary agreements but not redistribute income

Question 11

Poverty Reduction Policies

Answer 11

• Min-Wage Laws
• Welfare
• Negative Income Tax
• In-Kind Transfers
• Employment Insurance