Chapter 34 Key Terms McConnell and Brue 14th Edition
income inequality
The unequal distribution of an economy’s total income among persons or families.
Lorenz curve
A curve showing the distribution of income in an economy; the cumulated percentage of families (income receivers) is measured along the horizontal axis and cumulated percentage of income is measured along the vertical axis.
iIncome mobility
The movement of individuals or families from one income quintile to another over a period of years.
noncash transfers
A government transfer payment in the form of goods and services rather than money for example housing assistance and job training; also called in-kind transfers.
tradeoff between equality and efficiency
The fundamental fact that the system of rewards and penalties that is intended to encourage effort that will be channeled into socially productive activity, if it is to function with any degree of success, naturally leads to inequalities (Arthur M. Okun, Equality and Efficiency: the Big Tradeoff Washington: Brookings Institute, 1975. Page 1).
poverty rate
The percentage of the population with incomes below the official poverty income levels established by the Federal government.
entitlement programs
Government programs such as social insurance food stamps Medicare and Medicaid which guarantee particular levels of transfer payments to all who fit the programs’ criteria.
social insurance programs
The programs which replace some of the earnings lost when people retire or are temporarily unemployed which are financed by payroll taxes and which are viewed as earned rights (rather than charity).
OASDHI
(See Old Age Survivors and Disability Health Insurance.)
medicare
A Federal program which is financed by payroll taxes and provides for (1) compulsory hospital insurance for senior citizens and (2) low-cost voluntary insurance to help older Americans pay physicians’ fees.
unemployment
Failure to use all available economic resources to produce goods and services; failure of the economy to fully employ its labor force.
compensation to employees
Wages and salaries plus wage and salary supplements paid by employers to workers.
public assistance programs
Government programs which pay benefits to those who are unable to earn income (because of permanent handicaps or because they have very low income and dependent children); financed by general tax revenues and viewed as public charity (rather than earned rights).
supplemental security income (SSI)
A federally financed and administered program which provides a uniform nationwide minimum income for the aged blind and disabled who do not qualify for benefits under the Old Age Survivors and Disability Health Insurance or unemployment insurance program in the United States.
aid to families with dependent children (AFDC)
A state-administered and partly federally funded program in the United States which provides aid to families in which dependent children do not have the support of a parent because of the parent’s death disability or desertion.
food stamp program
A program permitting low-income persons to purchase for less than their retail value or to obtain without cost coupons that can be exchanged for food items at retail stores.
medicaid
A Federal program that helps finance the medical expenses of individuals covered by the Supplemental Security Income and Aid to Families with Dependent Children programs.
earned-income tax credit (EITC)
A Federal tax credit for low-income working families designed to encourage labor force participation.
Personal Responsibility Act
A 1996 law that eliminated the Federal government’s 6-decade-long guarantee of cash assistance for poor families whether adults in the family work or not; sets a limit of 5 years on receiving AFDC benefits and requires able-bodied adults to work after 2 years to continue to receive public assistance.