Measures of Poverty (For Example, the Poverty Line)and the Distribution

question 200

Multiple Choice

Measures of poverty (for example, the poverty line) and the distribution of income (for example, the Lorenz curve and the Gini coefficient) are misleading for which of the following two reasons?

• A)First, these measures do not take into account income mobility over time. Second, these measures ignore the effects of government programs meant to reduce poverty.
• B)First, none of these measures are adjusted for inflation. Second, they do not measure income on a per capita basis.
• C)First, these measures fail to include the income U.S. citizens earn working for foreign firms that have operations located in the United States. Second, these measures fail to include income foreign citizens earn working for U.S. firms that have operations in foreign countries.
• D)First, these measures fail to include dividend and interest income earned on stocks and bonds. Second, these measures fail to include the value of goods and services citizens make for their own consumption that are not sold in markets.

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Definitions:

Cognitive Dissonance

The psychological discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.

Market Concentration

The extent to which a small number of firms dominate a particular market, often measured by the concentration ratio or Herfindahl-Hirschman Index.

Homogenous Marketing

A marketing strategy where a company treats the market as a uniform entity by offering the same marketing mix to all consumers.