Answer the following statements true (T) or false (F)

Question

1. In the United States (as of 2013) the age group with the highest percentage of people living in poverty was age 65 and older.
2. The poverty trap is greater for working mothers than for nonworking mothers.
3. The federal government helps fund Medicaid, but each state is responsible for administering the program, determining the level of benefits, and determining eligibility.
4. A Lorenz curve is a graph that compares the cumulative income actually received to a perfectly equal distribution of income.
5. Economists use the demand and supply model to reason through the issues of income inequality. According to the law of supply and demand, if supply increases, then demand must decrease.

Answer 1

1. False
This statement is false. In the United States (as of 2013) the age group with the highest percentage of people living in poverty was ages 18 to 24 (20.6%). Those age 65 and older had the lowest poverty rate (9.5%).
2. True
This statement is true. The poverty trap is stronger for a working mother because she will have extra expenses like clothing, transportation, and child care that a nonworking mother will not face, making the economic gains from working even smaller for someone receiving diminishing assistance.
3. True
This statement is true. The federal government helps fund Medicaid, but each state is responsible for administering the program, determining the level of benefits, and determining eligibility.
4. True
This statement is true. A Lorenz curve is a graph that compares the cumulative income actually received to a perfectly equal distribution of income; it shows the share of population on the horizontal axis and the cumulative percentage of total income received on the vertical axis.
5. False
This statement is false. Both supply and demand can increase or decrease. If both increase, as in the case of high-skilled workers and jobs that require them, wages for those jobs will increase, as well.