1. What is the adverse selection problem?

Group of answer choices

• A problem that occurs when advertisements affect consumer choice. The problem is that quality declines and prices rise.
• A problem that occurs when some people receive benefits from a product without paying for it. The problem is that firms cannot cover their costs of providing the good.
• A problem that occurs when government sets specific regulations on safety and quality. The problem is that market incentives vanish and government failures arise.
• A problem that occurs when buyers and sellers have different amounts of information about the good for sale and the potential use that information to the detriment of the other. With adverse selection, only poor quality goods remain in the market.

2. Poverty is measured by the number of people who fall below a certain level of incomecalled the poverty linethat defines the income one needs for a basic standard of living. The official definition of the poverty line traces back to

Group of answer choices

• 1953 and the ability to pay for housing and food.
• Mollie Orshansky, whose idea was to define a poverty line based on the cost of a healthy diet.
• The Great Depression
• The 1965 cost of providing food, housing, and transportation

3. What is the poverty trap?

Group of answer choices

• The situation where a person becomes disabled and cannot work.
• The situation where a person becomes unemployed and cannot find another job.
• The situation where government assistance can result in a low or zero net gain for working.
• The poverty trap occurs when a person is poor, and structural discrimination prevents that person from escaping poverty.

4. A top challenge for government programs that seek to reduce poverty is:

Group of answer choices

• Measuring the success of the programs.
• That when the government phases out its support payments more slowly, the antipoverty program costs more money.
• Many people who don't need help are getting it.
• Overcoming the stigma associated with receiving government assistance.

5. Safety net programs include...

Group of answer choices

• Temporary Assistance for Needy Families
• Troubled Asset Recovery Program
• The healthcare program for injured professional athletes.
• AFDC

6. What factors account for the rise in income inequality across significant percentages of households?

Group of answer choices

• Changes in family structure.
• Stagnant wage rates.
• Improvements in the gender pay gap.
• Increases in the population of America.

7. What is a common way to measure income inequality?

Group of answer choices

• Use the IRS data to compare the income of the 20 highest income people to the income of the 20 lowest income people.
• Compare the incomes of the highest income people to the incomes of the lowest income people on a monthly basis.
• Dividing ranked households into equal groups.
• Compare the purchasing power of the highest income people to the purchasing power of the lowest income people.