6 The poverty rate would be significantly lower if the market value of in-kind transfers were added to family income. One of the largest in-kind transfers is Medicare, the government health-care program. Let's say that Medicare costs $5000 per fami ly.

a If the government gave each Australian family $5000 instead of providing access to Medicare services, do you think that most of these fami lies would spend that money to purchase private health insurance? Why? (Recal l that the poverty level for a family of four is about $44 000.)

b How does your answer to part

(a) affect your view about whether we should determine the poverty rate by valuing in-kind transfers at the price the government pays for them?

Explain.

c How does your answer to part

(a) affect your view about whether we should provide assistance to the poor in the form of cash transfers or in-kind transfers? Explain.