When Considering a Person's Standard of Living, Data on the Income

question 307

Multiple Choice

When considering a person's standard of living, data on the income distribution and the poverty rate may provide an incomplete picture because the poor may

• A)receive in-kind transfers.
• B)be lending to smooth their income over their life cycle.
• C)be saving to smooth their income due to a drop in transitory income.
• D)under-report their income.

---

Definitions:

SUTA Tax

State Unemployment Tax Act tax, a payroll tax that employers pay to fund the state's unemployment insurance.

Medicare

A federal health insurance program in the United States for people aged 65 and older, as well as for some younger people with disabilities.

Federal Income Tax

A tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

Federal Depository Bank

A financial institution where the government keeps its money and manages its financial transactions.