Question 1

Suppose the government decides to decrease the payroll tax paid by employers.What will happen to workers' wages? If the labor supply curve is perfectly inelastic,what will happen to employment? What will be the effect on workers' wages?

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The answer of Suppose the government decides to decrease the...

Question 2

Suppose an economic historian discovers that a tax on a particular good resulted in a large price change while having little effect on the quantity demanded.Was this good most likely a necessity or a luxury good? Explain.

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The answer of Suppose an economic historian discovers that a...

Question 3

Because of work disincentives,government transfer and tax policies have increased the inequality of income in the United States.

Accepted Answer

Government transfer and tax policies are generally designed to reduce income inequality by redistributing income from higher-income individuals to lower-income individuals through mechanisms like progressive taxation and social welfare programs.

Question 4

Why would the widespread splitting apart of families increase the income inequality in a nation?

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Question 5

In looking at income distribution,what is a quintile?

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Question 6

A social safety net aims at helping corporations employ the poor.

Accepted Answer

A social safety net aims at helping individuals and families in need by providing benefits and assistance, such as food stamps, affordable housing, and health care. It is not specifically designed to help corporations employ the poor.

Question 7

Suppose a new law requires that employers pay for employees' total retirement benefits.Show how the law affects the supply of and demand for labor.What happens to wages and employment relative to the pre-law situation?

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Question 8

Under what circumstance would an increase in the payroll tax paid by employers cause the wage to fall by the same percentage as the tax increase,regardless of the labor supply curve's elasticity?

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Question 9

Suppose the government considers imposing a tax on two types of goods: luxury goods and necessity goods.Luxury goods have a higher elasticity of demand than necessity goods.Does a tax on luxury goods have a greater deadweight loss than a tax on necessity goods?

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Question 10

The table below gives the income distribution in two countries,A and B.Draw the Lorenz Curve for each country.Which country has the larger Gini coefficient?

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The answer of The table below gives the income distribution...

Question 11

As a result of government tax and transfer policies,

Accepted Answer

Government tax and transfer policies are designed to redistribute income, which generally reduces income inequality. This is reflected in a lower Gini coefficient, which measures the extent of inequality in income distribution. A lower Gini coefficient indicates less inequality, suggesting that these policies are effective in making the income distribution more equal.

Question 12

Analyze the distribution of household incomes given in the table below.Rank the families by income.Draw a Lorenz curve for the income distribution of these five families.Is their distribution of incomes more equal than the distribution of incomes for the entire population of the United States?

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The answer of Analyze the distribution of household incomes given...

Question 13

Many politicians argue against taxing home heating oil because it is a regressive tax.Explain.If the demand for heating oil is very elastic,what happens to the quantity demanded after the tax is imposed? Who will bear most of the burden of the tax in this case?

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The answer of Many politicians argue against taxing home heating...

Question 14

The table below gives hours worked per month and welfare payments received.   (A)Assuming the hourly wage is $8,fill in the missing data.The total monthly income is the sum of the wage payment and the welfare payment.
(B)What is the increase in total income for each additional hour worked without any welfare program? What is the increase in total income for each additional hour of work with the welfare program? Does this welfare program hinder the incentive to work? Why?
(C)How could the incentive to work while on welfare be enhanced? Why would this solution be difficult politically?

Accepted Answer

The answer of The table below gives hours worked per...

Question 15

U.S.government tax and transfer policies have tended to lower income inequality.

Accepted Answer

U.S. government tax and transfer policies, such as progressive income taxes and social welfare programs, are designed to redistribute wealth and alleviate poverty, thus tending to lower income inequality.

Question 16

Consider the following income tax schedule for a married couple who are combining their incomes and filing jointly:  (A)What is the tax owed by the couple if each partner earns $20,000?
(B)Compare the tax that the couple would pay if they were not married (filing as single)with the amount of tax they pay as a married couple (filing jointly).
(C)What is the tax owed by a couple in which one spouse earns $40,000 and the other spouse earns no income?

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Question 17

Why doesn't a Lorenz curve ever bow above the line of equality?

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Question 18

Suppose a country is concerned about providing adequate incentives for entrepreneurs.What type of tax system should be implemented,progressive or flat?

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Question 19

Consider the following personal income tax schedule for a taxpayer who is not married (single).  (A)What is the tax due on an income of $20,000? What is the tax due on an income of $40,000?
(B)Why does the tax not double when the income doubles?
(C)Is this tax system progressive or regressive?

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Question 20

Given the data in the table below,draw the Lorenz curve before and after an income tax.Is this tax progressive or regressive?

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Quiz 14: Taxes, transfers, and Income Distribution