Question

measures of poverty (for example, the poverty line) and the distribution of income (for example, the lorenz curve and the gini coefficient) are misleading for which of the following two reasons?
a. first, these measures fail to include the income u.s. citizens earn working for foreign firms that have operations located in the united states. second, these measures fail to include income foreign citizens earn working for u.s. firms that have operations in foreign countries.
b. first, these measures do not take into account income mobility over time. second, these measures ignore the effects of government programs meant to reduce poverty.
c. first, none of these measures are adjusted for inflation. second, they do not measure income on a per capita basis.
d. first, these measures fail to include dividend and interest income earned on stocks and bonds. second, these measures fail to

Explanation:

• Income mobility over time: People's income positions (e.g., being in the poverty range or a certain income - distribution bracket) can change over years. For example, a person may be in poverty one year due to job loss but move out of it the next year when they get a new job. Traditional poverty and income - distribution measures often look at a snapshot in time and do not account for these changes.
• Government programs: Government initiatives like food stamps, housing subsidies, or earned - income tax credits can significantly improve the economic well - being of low - income individuals. However, measures like the poverty line (which is often based on pre - transfer income) or simple Lorenz curve/Gini coefficient calculations (if not adjusted for government transfers) do not fully capture the impact of these programs on reducing poverty and changing income distribution.

Answer:

B. First, these measures do not take into account income mobility over time. Second, these measures ignore the effects of government programs meant to reduce poverty.