Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Question
Chapter 28, Problem 10CQ
To determine
Income transfers and its impact on income inequality.
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Chapter 28 Solutions
Economics: Private and Public Choice
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- The table shows the distribution of market income. Suppose the government redistributes income by taxing the 60 percent of households with the highest market incomes 10 percent, then distributing the tax collected as an equal benefit to the 40 percent with the lowest market income. What percentage of total market income is redistributed to the second 20 percent of households? What is the income share of the third 20 percent of households after tax and redistribution? >>> Answer to 1 decimal place. earch The second 20 percent of households receives benefits equal to percent of total market income. The third 20 percent of households earns percent of total income after tax and benefits. I point(s) Households Lowest 20 percent Second 20 percent Third 20 percent Fourth 20 percent Highest 20 percent Market income (percentage of total market income) 5 9 20 30 36 Nextarrow_forwardHow much age affects inequality? Is there something the government can do about younger and older people's incomes?arrow_forwardFor the last ten years, how the Philippine government is executing policies to reduce poverty and income inequality for the last decade? Expand your answer.arrow_forward
- Why would income inequality be as damaging as poverty? Explain each concept.arrow_forwardWhich of the following are reasons why high income inequality may be inefficient? Check all that apply. 0 0 High inequality may lead to an overinvestment in higher education at the expense of primary education High inequality limits access to credit for a larger share of the population Redistribution through progressive tax systems creates work disincentives and limits investment. Savings rates for the very wealthy tend to be lower than in the middle class High inequality reflects differences in skills and effort by workersarrow_forwardhttps://data.oecd.org/inequality/income-inequality.htmarrow_forward
- Discuss the concept of the “optimal amount of inequality.” What are some of the practical problems in determining how much inequality really is optimal?arrow_forwardMany economists believe that a more effective way to supplement the income of the poor is through a negative income tax. Under this scheme, everyone reports his or her income to the government; individuals and families earning a higher income will pay a tax based on that income, while low-income individuals and families receive a subsidy, or negative tax. Assume that the only qualification required to receive a tax credit is low income.arrow_forwardHow do governments and families affect economic inequality?arrow_forward
- Why is there an increase in poverty and inequality?arrow_forward"How can the US government use taxation to encourage income equality?"arrow_forwardWhat does government now do, and what could and should government do, to reduce economic inequality? Discuss the impact of government on economic inequality and how it has changed over time. What are your top three suggestions for specific programs or policies which governments could adopt to change the level and trend of inequality? Why?arrow_forward
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