Poverty Level

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Poverty Level

by gmatrant » Sun Dec 23, 2012 1:31 am
The United States government uses only a household's cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.

Which of the following, if true, validates the contention that the government's calculation methods must be altered in order to provide statistics that measure true poverty?


a) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.

b) While the government's calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade.

c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government's calculation method.

d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.

e) The government's calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.

Can you please let me know how to approach this question, I am quite confused between C , D & E.
Will post the OA soon.
A kudos or thanks would do great if my answer has helped you :)

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by aman88 » Sun Dec 23, 2012 3:15 am
IMO C

A and B are instant eliminations. Option E seems right at some point but it is simply talking about the same thing that is discussed in the argument. It is not adding one more point to the credibility of the argument.

Next elimination is D, which is more like a generalization. 'Some economists endorse an alternate method.' Good that they do, but that is not what the question is asking us.
That leaves us with C only.

Thanks.

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by sid128 » Sun Dec 23, 2012 5:05 am
IMO C

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by viveksingh222 » Sun Dec 23, 2012 8:41 am
gmatrant wrote:The United States government uses only a household's cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.

Which of the following, if true, validates the contention that the government's calculation methods must be altered in order to provide statistics that measure true poverty?


a) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.

b) While the government's calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade.

c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government's calculation method.

d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.

e) The government's calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.

Can you please let me know how to approach this question, I am quite confused between C , D & E.
Will post the OA soon.
To answer this question the option must be saying -yes the government calculation method must be changed as there is a flaw in it.
D can be eliminated because it fails to find any flaw but it is suggesting a alternate way.
There is tie b/t C and E.
I am inclined towards C because E repeats the same information which is present in the argument, So IMO C

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by nisagl750 » Mon Dec 24, 2012 10:04 pm
gmatrant wrote:The United States government uses only a household's cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.

Which of the following, if true, validates the contention that the government's calculation methods must be altered in order to provide statistics that measure true poverty?


a) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.

b) While the government's calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade.

c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government's calculation method.

d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.

e) The government's calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.

Can you please let me know how to approach this question, I am quite confused between C , D & E.
Will post the OA soon.
IMOC

The question stem mentions retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation

The Statement C states that Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government's calculation method.

Thus, the private sector research shows that there is a flaw in government's calculation method (because It counts people as poor even though they are not) and thus it needs to be rectified.

What is the OA?

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by gmatrant » Tue Dec 25, 2012 4:06 am
Kudos to all those who chose C.
The OA is C.
A kudos or thanks would do great if my answer has helped you :)