SOLVED

Households Market income (percent of total) Money income (percent of total) Lowest 20% 1.1 3.4 Second 20% 7.1 8.6 Third 20% 13.9 14.6 Fourth 20% 22.8 23.0 Highest 20% 55.1 50.4 51) According to the table above, ________ percent of total income is redistributed from the highest income group. A) 4.7 B) 2.3 C) 1.5 D) 3.8 52) According to the table above, ________ percent of total income is redistributed to the lowest income group. A) 4.7 B) 2.3 C) 1.5 D) 3.8 53) According to the table above, income is redistributed from the ________ of households to the ________ of households. A) richest 20%;Â rest B) richest 20%;Â poorest 20% C) richest 40%;Â rest D) poorest 40%;Â richest 20% 54) According to the table above, the money income distribution is ________ unequal than the market income distribution because ________ income reflects income redistribution through taxes and benefits. A) less;Â money B) less;Â market C) more;Â money D) more;Â market Household grouped by income Group income (dollars) Lowest 20 percent 100,000 Second 20 percent 400,000 Third 20 percent 500,000 Fourth 20 percent 1,500,000 Fifth 20 percent 2,500,000 55) The table above shows the distribution of income in Swacko. The government of Swacko imposes a 20 percent tax on the people with the highest 40 percent of income. The government then distributes 50 percent of the tax collected to the lowest 20 percent and 25 percent to the second 20 percent and the middle 20 percent. Suppose that the before-tax group incomes remain as above. Before and after the distribution, what percentage of national income belongs to the lowest 20 percent? A) 2 percent; 10 percent B) 20 percent; 20 percent C) 5 percent; 25 percent D) 2 percent; 2 percent 56) The table above shows the distribution of income in Swacko. The government of Swacko imposes a 20 percent tax on people with the highest 40 percent of income. The government then distributes 40 percent of the tax collected to the lowest 20 percent and 30 percent to the second 20 percent and the middle 20 percent. After the redistribution, the Lorenz curve for income ________. A) is equal to the line of equality B) equals the Lorenz curve for wealth C) is closer to the line of equality D) is above the line of equality 57) The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. Lorenz curve B represents A) market income. B) money income. C) money income before taxes. D) income after taxes. 58) The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. The difference between the two curves equals A) market income. B) money income. C) the redistribution of income. D) the amount of taxes paid. 59) The “big tradeoff” refers to the tradeoff between A) work and leisure. B) equity and efficiency. C) public goods and private goods. D) taxes and transfers. 60) The “big tradeoff” refers to the tradeoff between A) money and market income. B) equity and efficiency. C) progressive and regressive taxes. D) flat-rate and proportional taxes..