Question 1

Which potential target group for welfare benefits would best satisfy the two characteristics of a good targeting mechanism?

Accepted Answer

A)  single mothers 
B)  people who have a missing leg 
C)  people earning less than $8 per hour 
D)  people without health insurance 
A)  single mothers 
B)  people who have a missing leg 
C)  people earning less than $8 per hour 
D)  people without health insurance B

Question 2

Does cash welfare have a constructive or destructive role in the lives of lower-income groups,according to Republicans and Democrats? Discuss the political views each party expressed during the debate on the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

Accepted Answer

To some conservatives,the negative effects of cash payments to low-income single mothers are responsible for many of the social ills in the United States.Newt Gingrich said in a televised address: "The welfare system's greatest cost is the human cost to the poor.In the name of 'compassion,' we have funded a system that is cruel and destroys families.Its failure is reflected by the violence,brutality,child abuse,and drug addiction in every local TV news broadcast." To some liberals,it is wrong to force low-income families off welfare and into the labor market.In a debate on work requirements for welfare recipients,Massachusetts Senator Edward Kennedy said,"We cannot throw workers into low-wage,dead-end jobs and expect them to support their families.We cannot force workers into jobs for which they have no skills and expect them to succeed."

Question 3

Which statement is TRUE if the benefit reduction rate of a welfare program is reduced?

Accepted Answer

A)  Total labor supply will go up. 
B)  Everyone who was working will choose to work less. 
C)  Total labor supply may go up or down. 
D)  Work incentives are not affected by the benefit reduction rate. 
A)  Total labor supply will go up. 
B)  Everyone who was working will choose to work less. 
C)  Total labor supply may go up or down. 
D)  Work incentives are not affected by the benefit reduction rate. C

Question 4

Which statement is TRUE regarding the 50% national reduction in welfare caseloads since the welfare reform legislation passed in 1996?

Accepted Answer

A)  About one-third of the decline in the welfare rolls can be ascribed to reform,with the rest due to the improving economy 
B)  Nearly all of the reduction in welfare caseloads was caused by the welfare reform. 
C)  Nearly all of the reduction in welfare caseloads was caused by the economic expansion in the late 1990s. 
D)  A nontrivial part of the reduction was due to the decreased fertility rates that were caused by the welfare reform. 
A)  About one-third of the decline in the welfare rolls can be ascribed to reform,with the rest due to the improving economy 
B)  Nearly all of the reduction in welfare caseloads was caused by the welfare reform. 
C)  Nearly all of the reduction in welfare caseloads was caused by the economic expansion in the late 1990s. 
D)  A nontrivial part of the reduction was due to the decreased fertility rates that were caused by the welfare reform.

Question 5

Empirical research shows that the welfare reform of 1996 has lowered welfare rolls without lowering the incomes of single mothers in the United States.Discuss the additional factors one must consider in order to determine whether this reform was successful in terms of raising the well-being of poor families.

Accepted Answer

The text outlines four factors.First,whi

Question 6

Suppose that the government could know for sure each individual's earnings capacity.This would allow government to:

Accepted Answer

A)  eliminate moral hazard to welfare recipients. 
B)  prevent high-wage earners from working less in response to taxation. 
C)  eliminate the administrative costs associated with welfare programs. 
D)  reduce the administrative costs associated with welfare programs. 
A)  eliminate moral hazard to welfare recipients. 
B)  prevent high-wage earners from working less in response to taxation. 
C)  eliminate the administrative costs associated with welfare programs. 
D)  reduce the administrative costs associated with welfare programs.

Question 7

Suppose that a monthly check is given to people with HIV or AIDS who earn less than $400 per week.This is an example of:

Accepted Answer

A)  in-kind welfare. 
B)  noncategorical welfare. 
C)  categorical and means-tested welfare. 
D)  in-kind and means-tested welfare. 
A)  in-kind welfare. 
B)  noncategorical welfare. 
C)  categorical and means-tested welfare. 
D)  in-kind and means-tested welfare.

Question 8

Suppose the government sends a monthly check to those earning less than $400 per week.This is an example of:

Accepted Answer

A)  in-kind welfare. 
B)  categorical welfare. 
C)  cash welfare. 
D)  earned income. 
A)  in-kind welfare. 
B)  categorical welfare. 
C)  cash welfare. 
D)  earned income.

Question 9

The conclusion that "welfare lock" should be removed means that:

Accepted Answer

A)  the government should not incarcerate the fathers of children in single-mother welfare homes because it reduces child support payments. 
B)  the government should unlink cash welfare from other in-kind benefits. 
C)  the government should reduce the benefits reduction rate to increase the benefits of working. 
D)  all welfare payments should be given based on unchangeable characteristics. 
A)  the government should not incarcerate the fathers of children in single-mother welfare homes because it reduces child support payments. 
B)  the government should unlink cash welfare from other in-kind benefits. 
C)  the government should reduce the benefits reduction rate to increase the benefits of working. 
D)  all welfare payments should be given based on unchangeable characteristics.

Question 10

At its peak,cash welfare spending by the federal government amounted to:

Accepted Answer

A)  1.7% of the federal budget. 
B)  10.7% of the federal budget. 
C)  24.5% of the federal budget. 
D)  33.3% of the federal budget. 
A)  1.7% of the federal budget. 
B)  10.7% of the federal budget. 
C)  24.5% of the federal budget. 
D)  33.3% of the federal budget.

Question 11

Suppose that the government is considering whether to implement a child care subsidy program for low-income families.
(a)Is this child care subsidy different from a wage subsidy to low-income families with children? Assume that all low-income families with children use formal child care in order to work.Explain.
(b)Why might the government want to regulate the quality of the child care? What problems might such regulation cause? Explain.

Accepted Answer

(a)This is indeed equivalent to a wage s

Question 12

Which statement suggests that an absolute measure of poverty is better than a relative measure of inequality for measuring the well-being of less well-off individuals?

Accepted Answer

A)  Self-reported well-being may fall as neighbors' incomes rise. 
B)  If those least fortunate achieve a sufficient level of consumption,it doesn't matter how rich the richest people are. 
C)  Driving a $10,000 car is more adequate when others drive $10,000 cars than when others drive $30,000 cars. 
D)  A person is only living in poverty if they have substantially less than others. 
A)  Self-reported well-being may fall as neighbors' incomes rise. 
B)  If those least fortunate achieve a sufficient level of consumption,it doesn't matter how rich the richest people are. 
C)  Driving a $10,000 car is more adequate when others drive $10,000 cars than when others drive $30,000 cars. 
D)  A person is only living in poverty if they have substantially less than others.

Question 13

Which of the following is NOT true about the evolution of poverty in the United States?

Accepted Answer

A)  In 2009,a family of four with an annual income below $23,050 was considered to be living in poverty. 
B)  The poverty rates fell for all persons,for the elderly,and for the very young in the 1960s and early 1970s. 
C)  The share of income received by the lowest quintile in the United States is smaller than in any other developed nation. 
D)  Poverty rates for those under 18 and those over 65 have risen since the 1960s. 
A)  In 2009,a family of four with an annual income below $23,050 was considered to be living in poverty. 
B)  The poverty rates fell for all persons,for the elderly,and for the very young in the 1960s and early 1970s. 
C)  The share of income received by the lowest quintile in the United States is smaller than in any other developed nation. 
D)  Poverty rates for those under 18 and those over 65 have risen since the 1960s.

Question 14

Currently in the United States,the share of income earned by the top 1% is now similar to what it was in the:

Accepted Answer

A)  1920s. 
B)  1930s. 
C)  1950s. 
D)  1960s. 
A)  1920s. 
B)  1930s. 
C)  1950s. 
D)  1960s.

Question 15

Suppose that welfare is restricted to unmarried mothers who have at least one child.This type of welfare could be best characterized as:

Accepted Answer

A)  in-kind welfare. 
B)  categorical welfare. 
C)  means-tested welfare. 
D)  cash welfare. 
A)  in-kind welfare. 
B)  categorical welfare. 
C)  means-tested welfare. 
D)  cash welfare.

Question 16

Which refers to the federal government's measure of "minimally acceptable" income?

Accepted Answer

A)  the poverty line 
B)  relative income inequality 
C)  the iron triangle 
D)  income shares 
A)  the poverty line 
B)  relative income inequality 
C)  the iron triangle 
D)  income shares

Question 17

Which statement suggests that a relative measure of inequality is better than an absolute measure?

Accepted Answer

A)  Self-reported well-being may fall as neighbors' incomes rise. 
B)  If those worse off achieve a sufficient level of consumption,it doesn't matter how rich the richest people are. 
C)  Living in a 1,000-square-foot house is no more adequate when others live in 1,500-square-foot houses than when others live in 3,000-square-foot houses. 
D)  A person's well-being is determined by their access to basic necessities,such as food,clothing,and shelter. 
A)  Self-reported well-being may fall as neighbors' incomes rise. 
B)  If those worse off achieve a sufficient level of consumption,it doesn't matter how rich the richest people are. 
C)  Living in a 1,000-square-foot house is no more adequate when others live in 1,500-square-foot houses than when others live in 3,000-square-foot houses. 
D)  A person's well-being is determined by their access to basic necessities,such as food,clothing,and shelter.

Question 18

The purpose of ordeal mechanisms is to:

Accepted Answer

A)  assist those who have been particularly unlucky in life 
B)  better target welfare benefits to those with particularly low incomes 
C)  redistribute income from high-income individuals to low-income individuals without reducing the national savings rate 
D)  separate those who truly need assistance from those who can support themselves. 
A)  assist those who have been particularly unlucky in life 
B)  better target welfare benefits to those with particularly low incomes 
C)  redistribute income from high-income individuals to low-income individuals without reducing the national savings rate 
D)  separate those who truly need assistance from those who can support themselves.

Question 19

Which welfare term describes welfare programs that restrict benefits by some demographic characteristic?

Accepted Answer

A)  in-kind welfare 
B)  categorical welfare 
C)  means-tested welfare 
D)  nonhedonic welfare 
A)  in-kind welfare 
B)  categorical welfare 
C)  means-tested welfare 
D)  nonhedonic welfare

Question 20

In the United States from the late 1960s through the late 1970s,the share of income accruing to the bottom income quintile _____ and the share accruing to the top income quintile _____.

Accepted Answer

A)  fell; fell 
B)  fell; grew 
C)  grew; grew 
D)  grew; fell 
A)  fell; fell 
B)  fell; grew 
C)  grew; grew 
D)  grew; fell

Exam 17: Income Distribution and Welfare Programs

Which potential target group for welfare benefits would best satisfy the two characteristics of a good targeting mechanism?

Does cash welfare have a constructive or destructive role in the lives of lower-income groups,according to Republicans and Democrats? Discuss the political views each party expressed during the debate on the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

Which statement is TRUE if the benefit reduction rate of a welfare program is reduced?

Which statement is TRUE regarding the 50% national reduction in welfare caseloads since the welfare reform legislation passed in 1996?

Suppose that the government could know for sure each individual's earnings capacity.This would allow government to:

Suppose that a monthly check is given to people with HIV or AIDS who earn less than $400 per week.This is an example of:

Suppose the government sends a monthly check to those earning less than $400 per week.This is an example of:

The conclusion that "welfare lock" should be removed means that:

At its peak,cash welfare spending by the federal government amounted to:

Which statement suggests that an absolute measure of poverty is better than a relative measure of inequality for measuring the well-being of less well-off individuals?

Which of the following is NOT true about the evolution of poverty in the United States?

Currently in the United States,the share of income earned by the top 1% is now similar to what it was in the:

Suppose that welfare is restricted to unmarried mothers who have at least one child.This type of welfare could be best characterized as:

Which refers to the federal government's measure of "minimally acceptable" income?

Which statement suggests that a relative measure of inequality is better than an absolute measure?

The purpose of ordeal mechanisms is to:

Which welfare term describes welfare programs that restrict benefits by some demographic characteristic?

In the United States from the late 1960s through the late 1970s,the share of income accruing to the bottom income quintile _____ and the share accruing to the top income quintile _____.

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In the United States from the late 1960s through the late 1970s,the share of income accruing to the bottom income quintile _ and the share accruing to the top income quintile _.