Which of the following is true about the income-transfer system in the United States?

Question

Quizplus · Accepted Answer

The income-transfer system, which includes programs such as Social Security and Medicaid, provides more output for lower-income households than the market alone provides. This is because transfer payments increase the disposable income of these households, which they can then use to purchase more goods and services, leading to higher overall output.

Option B is incorrect because transfer payments can address income inequality to some extent, but they do not solve the problem entirely.

Option C is incorrect because the income-transfer system does affect the distribution of income. While some taxes may be regressive, transfer payments are usually targeted towards lower-income households, making the overall effect progressive.

Option D is incorrect because the income-transfer system is not designed to give more income to rich households, but rather to provide a safety net for those who need it the most.

Which of the Following Is True About the Income-Transfer System