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.

---

Definitions:

Coinsurance Clause

A provision in an insurance policy that requires the policyholder to bear a portion of the risk by paying a percentage of the total claim.

Fair Market Value

The price at which property would exchange hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell.

Covered Peril

Risks or events that are specifically included as covered within an insurance policy, providing protection against losses from those events.

Coinsurance Clause

A provision in certain insurance policies requiring the policyholder to bear a specified percentage of the costs of covered services.