Which of the Following Statements About the Income Effect of an Income

question 18

Multiple Choice

Which of the following statements about the income effect of an income tax rate increase is true?

• A)The income effect is theoretically stronger for low-income taxpayers than for high-income taxpayers.
• B)The income effect is theoretically stronger for a family's secondary wage earner than for the family's primary wage earner.
• C)The income effect motivates individuals to find ways to increase their before-tax income.
• D)Both A.and C.are true.

---

Definitions:

Population Parameter

A numerical value that represents a characteristic of an entire population, such as its mean or standard deviation.

Interval Estimate

An estimate that provides a range of values which is likely to include the population parameter of interest.

Confidence Level

The confidence associated with an interval estimate. For example, if an interval estimation procedure provides intervals such that 95% of the intervals formed using the procedure will include the population parameter, the interval estimate is said to be constructed at the 95% confidence level.

Confidence Interval

A breadth of outcomes, sourced from sample-derived statistics, expected to surround the unknown figure of a population characteristic.