Which one of the following would increase income inequality as measured by official Census data and the quintile distribution?
A. a doubling of social security retirement benefits
B. the elimination of the food stamp program
C. the elimination of the TANF program
D. reduced divorce rates
Gomez argues that we need to increase the nation's output. Chang contends that our top priority should be a more equal distribution of income and output. It can be correctly stated that these two goals are:
A. essentially unrelated.
B. complementary because the realization of one will promote fulfillment of the other.
C. at least partially competing because the redistribution of income might impair incentives to work and produce.
D. complementary because a more equal distribution of income always promotes economic growth.
A bumper crop of farm products causes:
A. only a slight decline in the price of farm products because the demand for farm products is income inelastic.
B. a large decline in the price of farm products because the demand for farm products is price inelastic.
C. only a slight decline in the price of farm products because the demand for farm products is income elastic.
D. a large decline in the price of farm products because the demand for farm products is price elastic.
To determine which option would increase income inequality as measured by official Census data and the quintile distribution, we need to understand the impact of each option on income distribution.
A. Doubling social security retirement benefits: This option would likely decrease income inequality as it provides more income to retirees, who are typically in lower income quintiles.
B. Eliminating the food stamp program: Removing the food stamp program would likely increase income inequality as it would result in less support for individuals with lower incomes.
C. Eliminating the TANF program: TANF (Temporary Assistance for Needy Families) provides financial assistance to low-income families. Eliminating this program would also likely increase income inequality.
D. Reduced divorce rates: The impact of reduced divorce rates on income inequality is not straightforward. Divorce can sometimes lead to a redistribution of income, which may affect income inequality. However, the extent of the impact would depend on specific circumstances, making this option less clear.
Based on the impact analysis, options B and C, i.e., eliminating the food stamp program and eliminating the TANF program, would most likely increase income inequality as measured by official Census data and the quintile distribution.
Regarding the two perspectives on goals:
Gomez argues for increasing the nation's output, while Chang contends for a more equal distribution of income and output. These goals can be categorized as either:
A. Essentially unrelated: This option assumes there is no direct relationship between the two goals.
B. Complementary because the realization of one will promote the fulfillment of the other: This option suggests that achieving one goal will contribute to the achievement of the other.
C. At least partially competing because the redistribution of income might impair incentives to work and produce: This option suggests that focusing on income distribution may affect the incentives for work and productivity, potentially hinder economic growth.
D. Complementary because a more equal distribution of income always promotes economic growth: This option assumes that a more equal distribution of income always leads to economic growth.
The most accurate statement regarding the two goals is option C - they are at least partially competing because the redistribution of income might impair incentives to work and produce.
Regarding the impact of a bumper crop of farm products on prices:
A bumper crop of farm products would likely result in:
A. Only a slight decline in the price of farm products because the demand for farm products is income inelastic.
B. A large decline in the price of farm products because the demand for farm products is price inelastic.
C. Only a slight decline in the price of farm products because the demand for farm products is income elastic.
D. A large decline in the price of farm products because the demand for farm products is price elastic.
To determine the impact, we need to consider the concept of price elasticity of demand. If the demand for farm products is price elastic, then a large decline in price would be expected when supply increases. Conversely, if the demand is price inelastic, then only a slight decline in price would occur.
While the information given does not explicitly state the price or income elasticity of demand for farm products, it is commonly known that the demand for agricultural products is price inelastic. Therefore, option B - a large decline in the price of farm products because the demand for farm products is price inelastic - is most likely the correct answer.