Suppose That Jane Earns $10,000 in Year 1 and $15,000

question 14

Multiple Choice

Suppose that Jane earns $10,000 in year 1 and $15,000 in year 2, while Jim earns $15,000 in year 1 and $10,000 in year 2. Is there income equality for the two individuals?

• A) The annual data indicate equality, but the two-year data indicate inequality.
• B) The annual data indicate inequality, but the two-year data indicate equality.
• C) Both the annual and the two-year data indicate equality.
• D) Both the annual and the two-year data indicate inequality.

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Definitions:

Consumption Tax

A tax levied on the purchase of goods and services, which can include value-added tax (VAT), sales tax, or excise taxes.

Income Tax

A tax that governments impose on income generated by businesses and individuals within their jurisdiction.

Aggregate Demand

The total demand for all goods and services in an economy at a given overall price level and within a specified time period.

Aggregate Demand

Total economic demand for goods and services within an economy, calculated at a fixed price level during a designated time frame.