Understanding Poverty Traps Quiz

What is the welfare trap?

• A situation where people are financially stable enough to stay above the poverty line

• A situation where people are incentivized to work for financial stability

• A situation where people receive universal basic income regardless of wealth or employment status

• A situation where people lose access to government assistance as soon as they earn more than the qualification threshold

What are poverty traps?

• Economic and environmental circumstances that reinforce themselves, perpetuating poverty for generations

• Cycles of corrupt government or climate change affecting entire nations

• Government benefit programs that help people cover rent, utilities, and food

• Strategies employed by societies to help people in poverty meet basic needs

What is the main issue with means-tested welfare programs?

• They incentivize people to work for financial stability

• They provide a stable income floor below which no one can fall

• They provide benefits like education, childcare, or medical care equally across all citizens

• They remove access to benefits as soon as income exceeds a certain threshold

What is the proposed solution to remove welfare traps?

• Phasing out benefits gradually as income increases

• Eliminating government assistance programs altogether

• Allowing people to continue receiving benefits for a given period after finding a job

• Providing a fixed benefit to all members of society, regardless of wealth or employment status

What is the purpose of a universal basic income?

• To supplement any earned wages rather than replace them

• To remove access to benefits as soon as income exceeds a certain threshold

• To create a stable income floor below which no one can fall

• To incentivize people to remain in government assistance

What do mainstream economic models assume about people in poverty?

• They are not incentivized to remain in government assistance

• They are not affected by cycles of corrupt government or climate change

• They work for financial stability due to societal norms and personal values

• They are rational actors who weigh the cost and benefits of their options

What is the potential impact of less people taking on new jobs?

• The economy grows rapidly, leading to a decrease in poverty rates

• The government assistance programs become more effective in combating poverty

• The economy slows down, keeping people in poverty and potentially pushing people on the cusp of poverty over the edge

• The poverty traps are completely eliminated

How can governments redesign benefits to avoid penalizing people for working?

• By providing benefits like education, childcare, or medical care equally across all citizens

• By implementing a universal basic income that provides a fixed benefit to all members of society

• By allowing people to continue receiving benefits for a given period after finding a job

• By eliminating government assistance programs altogether