The Official Poverty Measure (OPM) only includes cash income in its measures of a family’s resources....

The Official Poverty Measure (OPM) only includes cash income in its measures of a family’s resources.

(1) Why is this a problem for understanding the effects of most of our anti-poverty programs?

(2) What is ONE way in which the Supplemental Poverty Measure (SPM) fixes this problem?

Expert Solution

1) Apparently official poverty measure only takes into account the cash income as mentioned in the question and not the various effects of the policy benefits provided by the government in its calculations. This cash income is then compared with a threshold to determine the extend of poverty in the country. However, ignoring the in kind benefits such as nutrition assistance or housing etc. gives a very vague picture to the calculations of the actual extend of poverty as measured by the official poverty measure which in turn does not show any impact of the anti-poverty programs that are there.

2) In the case of Supplemental Poverty Measure it takes into account the in kind benefits such as nutrition assistance, subsidized housing or energy assistance in its calculations. It further subtracts necessary expenses for critical goods and services not included in the thresholds from resources such as income tax, child care, medical care etc. Further the measure takes into account the geographical differences that were ignored in the OPM.

orchestra answered 1 year ago

The Official Poverty Measure (OPM) compares a measure of a family’s financial resources to a dollar...

The Official Poverty Measure (OPM) compares a measure of a family’s financial resources to a dollar amount representing the family’s needs. Families with resources less than needs are considered to be in poverty. The measure of needs is the cost of a thrifty food basket multiplied by 3. (1) What was the rationale for this calculation when it was originally created-- in other words, why was THE COST OF A THRIFTY FOOD BASKET multiplied by 3)? (2) Why might this...

Explain why, if you measure poverty according to the Supplemental Poverty Measure, the Earned Income Tax...

Explain why, if you measure poverty according to the Supplemental Poverty Measure, the Earned Income Tax Credit (EITC) reduces poverty the most of any program except for Social Security, but if you measure poverty according to the Poverty Gap, the EITC is less effective at reducing poverty. (15 points) In the paper “The EITC and the Extensive Margin: A Reappraisal,” Kleven says that the increases in the EITC in the mid-1990s did not increase the employment rates of mothers as...

Q1: Can a company reply on net income as a valid measure of cash needed to...

Q1: Can a company reply on net income as a valid measure of cash needed to pay fixed charges? Explain you answer Q2: Explain why companies do not include principle payment requirement when calculating earnings to fixed charges ratio.

Under the cash method, a taxpayer includes in his or her gross income all items of...

Under the cash method, a taxpayer includes in his or her gross income all items of income actually or constructively received during the tax year. If he or she receives property and services, the taxpayer must include what amount in income?

A firm does not have resources to collect on its accounts receivables and needs cash to...

A firm does not have resources to collect on its accounts receivables and needs cash to run its business. Which method of short-term financing (pledging or factoring accounts receivables) would you recommend and why?

An organization's cash flow will always be equivalent to its operating income

Government spending in Robok is $200 billion, and its only tax is an income tax with...

Government spending in Robok is $200 billion, and its only tax is an income tax with a marginal tax rate of 0.4. a. The balance on the government’s budget at a GDP level of $380 billion is a (Click to select) deficit surplus of $ billion. b. The balance on the government’s budget at a GDP level of $580 billion is a (Click to select) deficit surplus of $ billion. c. At what level of GDP will the economy of Robok have a balanced budget? Robok will have a balanced...

Crane Inc. currently only returns cash to its investors in the form of dividends. It pays...

Crane Inc. currently only returns cash to its investors in the form of dividends. It pays out 39% of its earnings per share. The return on new investment for Crane is 18.7%. Given this information, estimate the growth rate for the future dividends of Crane. Express your result in percent and round to two decimals (do not include the %-symbol in your answer).

The Tradition Corporation is considering a change in its cash-only policy. The new terms would be...

The Tradition Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 1.2 percent per period. Current Policy New Policy Price per unit $ 50 $ 52 Cost per unit $ 30 $ 30 Unit sales per month 2,000 2,125 Calculate the NPV of the decision to change credit policies. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

The Snedecker Corporation is considering a change in its cash-only policy. The new terms would be...

The Snedecker Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Current Policy New Policy Price per unit $ 59 $ 61 Cost per unit $ 33 $ 33 Unit sales per month 2,450? What is the break-even quantity for the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Question