Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
ECON EXAM 3 (C21)
| Question | Answer |
|---|---|
| Market economies: | Usually achieve greater prosperity, But prosperity is not shared equally |
| Labor: | The most important factor for determining households’ standard of living |
| Labor earnings: | Two-thirds of U.S. income depends on skills, effort, human capital, labor market policies, and wage-setting factors |
| Four questions of measurement: | How unequal is society, who is in poverty, how is inequality measured, and how often do incomes change? |
| Trends in income distribution: | 1935–1970: More equal distribution, 1970–2019: More unequal distribution |
| Reasons (Trends in income distribution): | Rising trade and skill-biased technology have decreased demand for unskilled labor and increased demand for skilled labor |
| Quintile ratio: | Income received by the richest quintile of the population, Divided by the income of the poorest quintile |
| Poverty rate: | Percentage of the population whose family income falls below an absolute level (poverty line) |
| Poverty line: | An absolute level of income set by the federal government for each family size below which a family is deemed to be in poverty |
| Characteristics of Poverty Line: | Depends on family size, Adjusted every year to account for changes in the level of price |
| Poverty + Race: | Blacks and Hispanics are more than twice as likely to live in poverty |
| Poverty + Age: | Children are more likely than average to be members of poor families, Older adults are less likely than average to be poo |
| Poverty + Family Composition: | Families headed by a single mother are about five times as likely to live in poverty as families headed by a married couples |
| Data on income distribution & poverty rate: | Annual family incomes show some inequality, but they give an incomplete picture of living standards |
| Standard measures of income distribution and poverty: | Pre-tax family incomes measure monetary earnings but exclude in-kind transfers and certain credits like the earned income tax credit |
| In-kind transfers: | Transfers given in the form of goods and services rather than cash |
| Life cycle: | The regular pattern of income variation over a person’s life |
| Characteristics of Life Cycle: | Income rises with age, peaking around 50 and dropping at retirement, creating annual income inequality that may not reflect true living standards |
| Permanent income: | A person’s normal income; Normal, or average, income over several year |
| Economic mobility: | People often move between income classes, with temporary poverty more common than persistent poverty |
| Intergenerational mobility: | Persistence of economic success from generation to generation, Varies from country to country, Negatively correlated with inequality |
| Utilitarianism: | The political philosophy according to which the government should choose policies to maximize the total utility of everyone in society |
| Utility: | A measure of satisfaction, Diminishing marginal utility- As a person’s income rises, the extra well-being derived from an additional dollar of income falls |
| Utilitarian case for redistributing income: | Based on diminishing marginal utility, Extra dollar of income has more utility to poor person than to rich person |
| Utilitarians do not advocate equalizing incomes: | Would reduce total income of everyone due to incentive effects and efficiency losses |
| Maximize total utility: | Stops short of making society fully egalitarian |
| Liberal contractarianism: | The political philosophy which the government should choose policies deemed just, as evaluated by impartial observers behind a “veil of ignorance" |
| Maximin criterion: | Claim that the government should focus on improving the well-being of the worst-off, allowing income differences that encourage incentives |
| Social insurance: | Government policy aimed at protecting people against the risk of adverse events |
| Libertarianism: | The political philosophy according to which the government should punish crimes and enforce voluntary agreements but not redistribute income |
| “safety net": | Poverty is associated with various economic and social ills |
| Policies to reduce number of people living in poverty: | Minimum-wage laws, Welfare, Negative income tax, In-kind transfers |
| Minimum-Wage Laws (Pros): | Helps the working poor without any cost to government, Little impact on employment (inelastic demand) |
| Minimum-Wage Laws (Cons): | In the long run, minimum wages mostly help teens from middle-income families due to elastic labor demand and high unemployment |
| Welfare: | Government programs that supplement the incomes of the needy |
| Temporary Assistance for Needy Families (TANF): | Assists families with children and no adult able to support the family |
| Supplemental Security Income (SSI): | Assists the poor who are sick or disabled |
| Welfare Critics: | Programs create perverse incentives, Encourage families to break up, Encourage women to give birth out of wedlock |
| Welfare Proponents: | Being a poor, single mother on welfare is a difficult existence at best, Inflation-adjusted welfare benefits fell as single-parent families increased |
| Negative income tax: | A tax system that collects revenue from high-income households and gives subsidies to low-income households; Provides a universal basic income |
| Earned Income Tax Credit (EITC): | Allows poor working families to receive income tax refunds greater than taxes paid during the year |
| Cash Payment Alternative: | People buy what they most need; but critics argue could be used for drugs, alcohol |
| Many policies aimed at helping the poor have unintended effects: | Discourage the poor from escaping poverty on their own, Very high effective marginal tax rates, Discourage families from working |
| Reduce the work disincentive of antipoverty program: | Welfare reforms aim to phase out benefits gradually, require work, and limit assistance to a set period, such as the 5-year cap in 1996 |
| “Workfare": | System requiring people to accept government jobs while collecting benefits |
Created by:
IanMcCormick20