I. Read and memorize the following words, word-combinations and word-groups:

aggregate income — cyKynHMfi npn6yroK

e.g. The percentage of aggregate income received by each fifth of the population is relatively constant through time.

family's real income — peanbHufi npn6yroK cjm'T

e.g. Suppose, for example, that every family's real income quadrupled in the next year.

median income — cepeflHw npn6yTOK

e.g. A family is in poverty if its income is less than one half the median income.

poverty — 6iAHicTb

e.g. Using the U.S. Government's definition of poverty, the percentage of black persons below the poverty line, although declining since 1964, remains above 35 percent.

official poverty line — ocbiujiiHa Mewa 6iflHocri

e.g. About 35 percent of those families headed by women are below the official poverty line.

lack of mobility — weflocraTHn Mo6inbHicTb

e.g. Earnings differ because of the lack of mobility.

progressive taxation — nporpecMBHe onoflaTKyeaHHsi

e.g. A tax is progressive if persons with higher incomes pay a higher fraction of their income in taxes than do persons with lower incomes.

proportional taxation — nponopujMMe onoAaTKyBaHHR

e.g. A tax is proportional if persons with higher incomes pay the same fraction of their income in taxes as do persons with lower incomes.

in turn — y cboio nepry

e.g. Transfers, in turn, may be either progressive or regressive.

in-kind transfer — flonoMora HaTypofo

e.g. Transfers may be in cash or in goods and services.

The latter are referred to as in-kind transfers.

cash transfer — flonoMora rpitiiMM

e.g. Once a society has made a decision to transfer income to the poor, it is better for the poor if the transfer is in cash rather than in-kind.

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negative income tax — HeraTMBHHM npn6yTKOBWH «noAa-tok» (BHnnaTa 3 6tOA>«eTy oco6aM 3 HH3bKMM piBHeM floxofly)

e.g. The rate at which the transfer benefits decline is the negative income tax.

II. Give English equivalents of the following:

6yTM no3a eKOHOMmnoK) cwcTeMOto niflBMinyBaTM 3apo6iTOK 3a6e3ne^,KeHHa TosapaMM t3 nocny- CTBopioBaTM CTHMyn flo npa-

uj po3noftin eKOHOMiHHHx 6nar peanbHMM ciMeMHHM npn6y-

TOK

HepiBHicTb y po3noAini npw-6ymiB

raMM niABnuj,eHH(i MaTepianbHoro ao6-

po6yry rocTpa, HeBiflKnaAHa npo6neMa na-

ujoT enoxM 6yrn no3a ot^iivMHoro Me>KeK> 6ia-

HOCTi

III. Fill in the blanks with appropriate words:

always

distributing

differences

to increase

intensive

difficult

income

money

inequality

different

1. If should be clear that differences

in individual characteristics are closely connected with ... in income.

2. Lack of mobility may occur because indivi­duals choose not to make changes in order ... their earnings.

3. There is an ... network of transfers to those with lower incomes.

4. That is much of the welfare system in the U.S. is based on ... goods and services.

5. ... in income is about the same now as it was just following World War II.

6. Making the market ... more fair also makes it less efficient.

7. Comparing the distributions of income among economies is ... because each country defi­nes income in a ... way.

8. Give ... and give if in such way that the reci­pient ... has an incentive to work.

IV. Read and translate the text:

The central task of any economy is providing for and enhancing the material well-being of those who live within it. There are two aspects to this task: the production of more and better goods and services, and the distribution of those goods and services in a fair manner.

In a market economy some are rewarded handsomely while others are perhaps not rewarded at all. How a society is to deal with those who are, in a sence, outside of the economic system is one of the pressing problems of our era, our economy, and our society.

Notice that the percentage of aggregate income received by each fifth of the population is relatively constant through time. This stability or constancy is one of the surprising facts about the U.S. economy: the distribution of income has been relatively stable for a long time. Indeed, inequality in income, as measured this way, is about the same now as it was just following World War II.

France and the United States appeared to have the greatest inequality in the distribution of income when compared with other industrialized nations.

There will, of course, always be bottom 20 or 10 or 5 per­cent of any distribution. Suppose, for example, that every family's real income quadrupled in the next year. Would it be useful to think of the bottom of the distribution as a group in poverty? For example, «A family is in poverty if its income is less than one-half the median income.»

Who are the poor? Using the U.S. Government's definition of poverty, the percentage of black persons below the poverty line, although declining since 1964, remains above 35 percent. Similarly, about 35 percent of those families headed by women are below the official poverty line.

It should be clear that differences in individual characteristics are closely associated with differences in income.

Earnings differ because of the lack of mobility. Lack of mobility may occur because individuals choose not to make changes in order to increase their earnings; because individuals are not allowed to make changes in order to increase their earnings (for instance, discrimination); or because individuals have abilities that differ which cannot be easily obtained by others who would like to increase their earnings (special talents).

A tax is proportional if persons with higher incomes pay the same fraction of their income in taxes as do persons with lower incomes. A tax is progressive if persons with higher incomes pay a higher fraction of their income in taxes than do persons with lower incomes.

Transfers, in turn, may also be either progressive (transfers to those lower incomes) or regressive (transfers to those with higher incomes). In addition, transfers may be in cash or in goods and services. The latter are referred to as in-kind trans­fers.

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There are two ideas behind the negative income tax pro­posed to which economists are strongly attached. First, once a society has made a decision to transfer income to the poor, it is better for the poor if the transfer is in cash rather than in-kind. Second, once a society has made the decision to transfer income to the poor, it is better for the poor if the transfer system provides positive incentives to increase transfer plus market income in the market. Put simply, «Give cash and give it in such a way that the recipient always has incentive to work» (pp. 413—437).