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Describe how each of these changes is likely to affect poverty and inequality: a. Incomes rise for low-income and high-income workers, but rise more for the high-income earners. b. Incomes fall for low-income and high-income workers, but fall more for high-income earners.

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?

Using two demand and supply diagrams, one for the low-wage labor market and one for the high-wage labor market, explain how a program that increased educational levels for a substantial number of low-skill workers could reduce income inequality.

Here is one hypothesis: A well-funded social safety net can increase economic equality but will reduce economic output. Explain why this might be so, and sketch a production possibility curve that shows this trade-off.

Which set of policies is more likely to cause a tradeoff between economic output and equality: policies of redistribution or policies aimed at the ladder of opportunity? Explain how the production possibility frontier tradeoff between economic equality and output might look in each case.

How is the poverty rate calculated?

What is the difference between poverty and income inequality?

How does the poverty trap discourage people from working?

How can the effect of the poverty trap be reduced?

Briefly explain the differences between TANF, the earned income tax credit, SNAP, and Medicaid.