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Chapter 15: Q. 45 (page 379)
In country B, the population is 900 million and 100 million people are living below the poverty line. What is the poverty rate?
11.11%
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We have discovered that the welfare system discourages recipients from working because the more income they earn, the less welfare benefits they receive. How does the earned income tax credit attempt to loosen the poverty trap?
Think about the business cycle: during a recession,
unemployment increases; it decreases in an
expansionary phase. Explain what happens to TANF, SNAP, and Medicaid programs at each phase of the business cycle (recession, trough, expansion, and peak).
Explain how a country may experience greater
equality in the distribution of income, yet still
experience high rates of poverty. Hint: Look at the
Clear It Up "How do governments measure poverty in low-income countries?" and compare to Table 15.5.
Explain a situation using the supply and demand for skilled labor in which the increased number of college graduates leads to depressed wages. Given the rising cost of going to college, explain why a college education will or will not increase income inequality.
Explain how you would create a government
program that would give an incentive for labor to increase hours and keep labor from falling into the poverty trap.
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