Question 1

In 2009, what is the official poverty rate for a family of four living in a smaller rural area, as determined by LICO?

Accepted Answer

The official poverty rate for a family of four living in a smaller rural area, as determined by the Low Income Cut-Off (LICO) in 2009, was approximately $23,000. This figure is used as a threshold to gauge the income level below which a family might be considered to be living in poverty.

Question 2

What are social insurance programs such as Employment Insurance and Old Age Security designed to do?

Accepted Answer

Social insurance programs like Employment Insurance and Old Age Security are designed to reallocate income and reduce relative poverty by providing financial support to individuals in need, such as the unemployed or elderly, ensuring a basic standard of living.

Question 3

The poverty rate in Canada is defined as the proportion of the population that fails to earn a minimum relative income standard. Which of the following best describes poverty rates in Canada since the 1980s?

Accepted Answer

There is no defined trend in poverty rates in Canada since the 1980s. While there have been fluctuations in the poverty rate, there hasn't been a clear trend in either direction (up or down).

Question 4

Ceteris paribus, if the cost of feeding and housing a family were to increase, what would this increase?

Accepted Answer

The increase in the cost of feeding and housing a family would lead to an increase in a family's cost of living. If the increase is significant and the family's income remains the same or decreases, they may not be able to afford basic necessities such as food, healthcare, and shelter. This would result in a downward shift in their standard of living, leading to a higher level of absolute poverty.

Question 5

Under what circumstances might a binding minimum wage be effective in easing the burden on the poor?

Accepted Answer

A binding minimum wage is more effective in easing the burden on the poor if the demand for unskilled labor is relatively inelastic because employers are less likely to reduce employment significantly in response to the higher wage.

Question 6

Which of the following government subsidies is NOT likely to reduce relative poverty?

Accepted Answer

The National Gallery of Canada is a cultural institution and does not directly address poverty reduction. However, it may indirectly benefit individuals from lower-income households by providing opportunities for education and cultural enrichment. The other choices, free education for K-12, subsidized day care, and a rapid-transit system, can all have direct impacts on reducing relative poverty by improving access to education, employment opportunities, and affordable transportation.

Question 7

Because the poverty line is a relative standard, what can we conclude?

Accepted Answer

A relative poverty line means that it is defined in relation to the overall distribution of income or consumption in a society. As an economy grows, the poverty line itself may rise if it is pegged to median income, so the poverty rate may not decrease even if incomes rise.

Question 8

Which of the following best explains why garbage collectors are paid a higher wage than many others with comparable skills?

Accepted Answer

Garbage collection is often considered an unpleasant and dirty job, which can make it difficult to find people willing to do it. As a result, garbage collectors may be paid a higher wage to compensate for the unpleasant working conditions.

Question 9

From a purely economic point of view, when does discrimination exist?

Accepted Answer

Discrimination exists when equivalent factors (e.g. workers with the same skills and experience) earn different payments for equal contributions to output. This means that some individuals are not receiving fair compensation for their work solely based on factors such as their race, gender, or nationality. Option A only refers to a specific group (immigrants) and their earnings compared to Canadian-born workers and does not consider whether they are being treated unfairly. Option B is a theoretical concept that does not necessarily reflect real-world conditions, and option C refers specifically to gender-based discrimination.

Question 10

Amongst which of the following groups is the amount of poverty in Canada highest?

Accepted Answer

Young adults aged 18-24 with only a high school education often face higher poverty rates due to limited job opportunities and lower wages compared to those with higher education or more work experience.

Question 11

Which of the following is an example of wage discrimination?

Accepted Answer

Wage discrimination occurs when people are paid different salaries based on factors that are not related to their job performance, such as their gender, race, ethnicity, or age. Choice B is an example of wage discrimination because it involves paying people different salaries based on their ethnicity, which is unrelated to their job performance. Choices A, C, and D are not examples of wage discrimination because they are based on factors that are directly related to job performance.

Question 12

What is an alternative to the quota rules implicit in employment equity laws?

Accepted Answer

A subsidy provided to firms that hire employees from designated groups can encourage them to hire more individuals from these groups without imposing a penalty on firms that do not comply. This approach can lead to a more positive and voluntary response from employers and can ultimately lead to greater long-term progress in achieving diversity and equity in the workforce. The other options (tax on firms, tax on workers, and subsidy for consumers) may not be as effective in achieving the same goals.

Question 13

Which of the following best describes a progressive tax system?

Accepted Answer

A progressive tax system imposes higher marginal tax rates on higher incomes, meaning that those who earn more are taxed at a higher percentage than those who earn less. This is designed to create a fairer distribution of the tax burden and to help reduce income inequality.

Question 14

Which of the following best explains why there are differences between the average earnings of men and women?

Accepted Answer

The differences in average earnings between men and women may be due to a variety of factors, including differences in work experience, education levels, and job types. While discrimination may be a factor in some cases, it is not the sole explanation for the earnings gap.

Question 15

What does the Canadian poverty rate measure?

Accepted Answer

The Canadian poverty rate measures the percentage of people whose income falls below an identified income standard. This income standard is set by Statistics Canada's Low Income Measure (LIM), which is based on the percentage of people living below half the median income in Canada. The LIM is calculated annually and takes into account family size, location, and age of household members. Therefore, option D is the correct answer. Options A and B are specific income thresholds used to determine eligibility for certain government programs, but they do not fully capture the poverty rate. Option C is incorrect as it measures government expenditures rather than the poverty rate itself.

Question 16

Which of the following government funded programs is NOT considered a welfare program?

Accepted Answer

Medical Services Plan is a publicly funded health insurance program and not considered a welfare program. Employment Insurance, Guaranteed Income Supplement, and Ontario Child Benefit are all examples of welfare programs.

Question 17

Which of the following policies is likely to alleviate relative poverty in Canada?

Accepted Answer

A progressive income tax system would redistribute wealth from the wealthy to the less wealthy, thus alleviating relative poverty. Price and wage controls and anti-combines legislation may have some effect on reducing costs, but they do not directly address income inequality. Economic growth may increase overall income levels, but it does not guarantee equitable distribution of wealth.

Question 18

Which of the following best explains why firefighters are generally paid higher wages than those with comparable skills?

Accepted Answer

Firefighting is dangerous work, which increases the risk to firefighters' health and safety. Due to this, they are generally paid higher wages than those with comparable skills in other professions.

Question 19

In the Nanaimo coalfields in British Columbia in the 1870s, miners of Chinese descent received lower wages than miners of British and Scottish descent. Although the wages of both groups tended to rise over time, the gap persisted until after WWI. Both groups of miners did the same work and were equally productive. What do economists call this pay differential?

Accepted Answer

The pay differential described in the scenario is an example of wage discrimination, which occurs when workers are paid differently for the same work based on characteristics such as race or gender.

Question 20

How can poverty, as defined using relative income, be eliminated?

Accepted Answer

Poverty, as defined using relative income, means that a certain percentage of the population has lower income compared to the average income in the society. To eliminate this, income redistribution is a necessary step. This can be achieved through taxation policies, welfare programs, and other measures that aim to transfer income from the richer members of society to the poorer ones. This can help to reduce income inequality and improve the standard of living for the poorest sections of society. Options A, B, and D can contribute to economic growth and development, but without income redistribution, poverty may persist, as income gains are not distributed equally across the population.

Quiz 11: Labour Markets and the Distribution of Income