Which of the Following Statements Correctly Describes How Taxes Redistribute

question 35

Essay

Which of the following statements correctly describes how taxes redistribute income across different households in an economy?
A) The richest 40 percent of households increase their share of income.
B) The poorest 60 percent of households increase their share of income.
C) Taxes have no effect on the distribution of income.
D) The poorest 20 percent of households receive 20 percent of their income from the government.
E) The richest 20 percent of households increase their share of income and the poorest 20 percent decrease their share of income.

• A) The richest 40 percent of households increase their share of income.
• B) The poorest 60 percent of households increase their share of income.
• C) Taxes have no effect on the distribution of income.
• D) The poorest 20 percent of households receive 20 percent of their income from the government.
• E) The richest 20 percent of households increase their share of income and the poorest 20 percent decrease their share of income.

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Definitions:

Independence of Systems

The principle that different systems or processes operate autonomously without interference from or interaction with each other.

Hierarchical Integration

A concept in psychology that suggests complex cognitive processes are formed by integrating simpler ones into a structured hierarchy.

Proportional Changes

Adjustments or alterations that maintain a consistent relationship or ratio among components or between an individual component and a whole.

Menarche

A girl’s first menstruation.