Skip to main content
Back

Polices to Reduce Poverty quiz

Control buttons has been changed to "navigation" mode.
1/15
  • What is the purpose of minimum wage laws in the context of poverty reduction?
    Minimum wage laws set a price floor for wages to ensure workers earn at least a certain amount, helping the poor earn more money.
  • How does welfare help reduce poverty?
    Welfare provides cash payments to supplement the income of people in need, helping them meet basic living expenses.
  • What is a negative income tax?
    A negative income tax is a system where low-income families receive subsidies from the government instead of paying taxes.
  • How is the negative income tax calculated in the example given?
    It is calculated as one-fourth of income minus \$10,000; if the result is negative, the family receives that amount as a subsidy.
  • What is an in-kind transfer?
    In-kind transfers are non-cash benefits provided to the poor, such as food stamps or free health care.
  • Give an example of an in-kind transfer in the United States.
    Examples include food stamps (vouchers for food) and Medicaid (free health care for the poor).
  • What is a potential downside of anti-poverty programs like welfare and negative income tax?
    These programs can reduce the incentive to work, as benefits decrease when earnings increase, making work less attractive.
  • How can welfare programs create a disincentive to work?
    If benefits are reduced as income rises, individuals may find that working more does not improve their standard of living.
  • What happens to a poor family’s benefits as they earn more money under many anti-poverty programs?
    Their benefits decrease, which can make additional work less rewarding financially.
  • What is the main trade-off policymakers face when designing anti-poverty programs?
    The trade-off is between providing support to the poor and maintaining incentives for people to work.
  • How does the earned income tax credit in the US relate to the negative income tax?
    The earned income tax credit functions similarly to a negative income tax by providing subsidies to low-income workers.
  • What is the effect of a guaranteed income program on work incentives?
    A guaranteed income can reduce the incentive to work, as individuals may receive the same income whether they work or not.
  • How did Obamacare subsidies affect poor families’ incentives to earn more?
    As poor families earned more, their government health care subsidies decreased, sometimes leaving them no better off despite higher earnings.
  • Why might a poor family choose not to increase their work effort under certain welfare programs?
    Because the loss of benefits can offset the additional income from working, making extra effort financially unrewarding.
  • What is the role of in-kind transfers in poverty reduction?
    In-kind transfers provide essential goods and services directly to the poor, improving their well-being without giving cash.