Which of the Following Is False About Data on the Inequality

question 36

Multiple Choice

Which of the following is false about data on the inequality of annual family (or household) incomes?

• A) The degree of inequality is reduced when transfers and taxes are considered.
• B) The inequality in annual income data understates the true degree of inequality in lifetime income.
• C) Differences in age and family characteristics contribute to the degree of inequality.
• D) The inequality in consumption spending across households is smaller than the inequality in annual income.

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Definitions:

Operating Activities

Day-to-day actions that are involved in running a company, such as selling products, managing expenses, and paying employees, which are reflected in the cash flow statement.

Direct Method

A cash flow statement preparation approach that lists major categories of gross cash receipts and payments, offering a more straightforward view of a company’s cash flow from operational activities.

Indirect Method

A way to report cash flows from operating activities by starting with net income and adjusting for non-cash transactions.

Common Shares

Shares of ownership in a corporation that grant holders voting rights and a residual claim on the corporation's assets and earnings.