An Increase in Inequality Will Always Be Accompanied by

question 26

Multiple Choice

An increase in inequality will always be accompanied by

• A) a reduction of earnings of those in the lowest percentiles.
• B) an increase of earnings of those in the highest percentiles.
• C) an increase in the dispersion of incomes.
• D) all of the above.

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Definitions:

Federal Tax Withholding

The portion of an employee's wages removed by the employer and sent directly to the government as partial payment of income tax.

FICA Withholding

The process by which employers withhold social security and Medicare taxes from their employees' paychecks, contributing to the FICA taxes owed.

Social Security Limit

The maximum amount of earnings on which Social Security payroll taxes are levied, also affecting the amount that can be received as Social Security benefits.

AGI

Adjusted Gross Income is your gross income minus allowable deductions, used to determine your taxable income on your federal income tax return.