Microeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 1

In season three of the TV show "The West Wing," the federal government considers redefining the national poverty measure in a way that would classify an additional 4 million people as poor. The president worries that his administration will be criticized for leading the country into greater poverty. Explain whether this change would have reflected a shift in an absolute measure of poverty, a relative measure of poverty, or whether it cannot be known. Finally, explain why all else equal, the president is not responsible for causing greater poverty.