Question 1

The Supplemental Nutrition Assistance Program (formerly the food-stamp program)mostly pays out cash-vouchers to eligible households.

Accepted Answer

The Supplemental Nutrition Assistance Program (SNAP) primarily provides eligible households with electronic benefit transfer (EBT) cards, which can be used like debit cards to purchase eligible food items, not cash-vouchers.

Question 2

The basic reason why the debate between income equality versus inequality is ongoing is because there is a trade-off between income equality and economic efficiency.

Accepted Answer

The debate persists because achieving greater income equality often involves redistributive policies that can reduce incentives for economic efficiency, leading to a trade-off between the two goals.

Question 3

Eligibility for social insurance programs is largely on the basis of need and "means tests."

Accepted Answer

Eligibility for social insurance programs is typically based on work history and payroll contributions, not on need or "means tests," which are more characteristic of public assistance programs.

Question 4

All social insurance programs are welfare or public charity programs.

Accepted Answer

Social insurance programs are designed to provide financial assistance to individuals based on their previous contributions (such as payroll taxes), whereas welfare or public charity programs are need-based and do not require prior contributions.

Question 5

U.S. income statistics indicate that approximately one-eighth of the nation lived in poverty in 2017.

Accepted Answer

According to the U.S. Census Bureau, in 2017, about 12.3% of the population lived in poverty, which is roughly one-eighth of the nation.

Question 6

The Social Security program is financed with funds from general tax revenues of the federal government.

Accepted Answer

The Social Security program is primarily financed through dedicated payroll taxes called Federal Insurance Contributions Act (FICA) taxes, not through general tax revenues.

Question 7

The Temporary Assistance for Needy Families (TANF)program that replaced the old Aid for Families with Dependent Children welfare program succeeded in reducing the number of welfare recipients and increasing the employment rate among single mothers until the 2007-2008 recession hit.

Accepted Answer

The Temporary Assistance for Needy Families (TANF) program, which replaced the Aid to Families with Dependent Children (AFDC) program in 1996, was successful in reducing the welfare rolls and increasing employment among single mothers due to its work requirements and time-limited assistance. These trends were evident until the economic downturn during the 2007-2008 recession, which affected employment rates and increased demand for assistance.

Question 8

Differences in skills or ability are one major reason for income differences in the United States.

Accepted Answer

Differences in skills or abilities, often referred to as human capital, significantly contribute to income disparities in the United States, as individuals with higher levels of education, experience, or specialized skills tend to earn higher incomes.

Question 9

In the taste-for-discrimination model, a prejudiced employer who prefers white workers and who has a discrimination coefficient of $3/hour would still hire African-Americans if the market wage rate were $22/hour for white workers and $20/hour for African Americans.

Accepted Answer

The answer of In the taste-for-discrimination model, a prejudiced employer...

Question 10

Labor market discrimination occurs when equivalent labor resources are paid or treated differently even though their productive contributions are equal.

Accepted Answer

Labor market discrimination refers to the unequal treatment of workers with equivalent skills and productivity based on characteristics such as race, gender, religion, or nationality, leading to differences in pay, hiring, or promotion practices not justified by differences in productivity.

Question 11

During the past 35 years or so, the degree of income inequality in the United States has decreased considerably.

Accepted Answer

Income inequality in the United States has increased over the past 35 years, with the wealth gap between the richest and the poorest widening significantly.

Question 12

The unequal distribution of wealth among households in the United States is one of the causes of income inequality.

Accepted Answer

The unequal distribution of wealth among households directly contributes to income inequality, as wealthier households have more resources and opportunities to generate income, while those with less wealth have fewer opportunities, perpetuating the cycle of income inequality.

Question 13

The Temporary Assistance for Needy Families (TANF)program expanded welfare benefits and has no limit on the number of years for receiving welfare benefits.

Accepted Answer

TANF, established in 1996, actually imposed limits on welfare benefits, typically restricting assistance to a maximum of 5 years over a person's lifetime.

Question 14

If income inequality is increasing, it means that the income levels of the poor are falling while the income levels of the rich are rising.

Accepted Answer

Increasing income inequality means the gap between the rich and the poor is widening, but it doesn't necessarily mean the poor's income is falling; it could also mean that the income of the rich is increasing at a much faster rate than that of the poor.

Question 15

The incidence of poverty is very high among the elderly (65 years or older).

Accepted Answer

While poverty does affect the elderly, various social security measures and retirement benefits in many countries have significantly reduced poverty rates among those 65 years or older compared to other age groups.

Question 16

The Gini coefficient or ratio is a summary measure of income inequality derived from the Lorenz curve.

Accepted Answer

The Gini coefficient is indeed a measure of income inequality within a population, derived from the Lorenz curve, which graphically represents the distribution of income or wealth.

Question 17

The distribution of household income in the United States becomes more unequal after taxes and transfer payments are taken into account.

Accepted Answer

The distribution of household income in the United States becomes more equal after taxes and transfer payments are taken into account, as these mechanisms are designed to redistribute income from wealthier to poorer households.

Question 18

When welfare payments like housing credits are completely cut off when the recipient's income goes above a certain threshold, then this could discourage the recipient from finding more work or a better-paying job.

Accepted Answer

This situation creates a "welfare cliff," where individuals may avoid increasing their income through work to not lose their benefits, as the loss of benefits can outweigh the financial gain from higher income.

Question 19

One basic argument for redistributing income to achieve more equality rests on the idea of maximizing the society's total utility when there is diminishing marginal utility from income.

Accepted Answer

The argument is based on the principle of diminishing marginal utility, which suggests that as an individual's income increases, the additional satisfaction (utility) gained from an extra unit of income decreases. Therefore, redistributing income from wealthier to poorer individuals can increase the overall utility of society, as the utility gained by the poorer individuals from the additional income is greater than the utility lost by the wealthier individuals from whom the income is redistributed.

Question 20

A Universal Basic Income program would guarantee that every household receives the same income.

Accepted Answer

Universal Basic Income (UBI) guarantees every individual, not household, a certain amount of money, regardless of employment status or income level.

Quiz 23: Income Inequality, Poverty, and Discrimination