Lecture 2/ Chapter 20

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

Liberalism

Answer 2

The political philosophy according to which the government should choose policies deemed just, as evaluated by an impartial observer behind a “veil of ignorance”

Question 3

Utility

Answer 3

A measure of happiness or satisfaction

Question 4

In-kind Transfers

Answer 4

Transfers to the poor given in the form of goods and services, not cash

Question 5

Poverty Rate

Answer 5

The percentage of the population whose family income falls below an absolute level called the poverty line

Question 6

Libertarianism

Answer 6

The political philosophy according to which the government should punish crimes and enforce voluntary agreements but not redistribute income

Question 7

Utilitarianism

Answer 7

The political philosophy according to which the government should choose policies to maximize the total utility of everyone in society

Question 8

Permanent Income

Answer 8

A person’s normal income

Question 9

Welfare

Answer 9

Government programs that supplement the incomes of the needy

Question 10

Maximum Criterion

Answer 10

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

Question 11

Negative Income Tax

Answer 11

A tax system that collects revenue from high-income households and gives subsidies to low-income households