Question

1. With a poverty gap in 2014 of about $190 billion, a cash transfer of this amount to the poor would have eliminated poverty. Do you agree? Comment.

2. Is a dollar's worth of food stamps as valuable as a dollar's worth of cash? Explain.

3. what can you say about the work experience of the poor? How does it compare to the non-poor? How does work experience differ between two parent and female-headed families?

Answer 1

Answer 1 - Non, I do not agree with the given statement. This is because , it is not necessary that cash transfer of $ 190 billion is used up fully in the economy to eliminate the poverty. People will spend based on their MPC .Hence some amount will be saved and not consuned. The saved amount will cause a leakage and therefore the poverty gap will not be eliminated. This must go through the multiplier effect in the economy so that the income rises in multiple of the cash transfer and hence reduce the poverty gap