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Practice mode Income Inequality

What is meant by tax incidence?

Correct answer B. The ultimate distribution of a tax's burden

Explanation

Tax incidence asks who really bears a tax after prices adjust, which can differ from who legally pays it. A tax on sellers may be largely passed on to buyers through higher prices.

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Question 01 Income Inequality

Since standard measures of income distribution leave out in-kind transfers, how do they relate to the true inequality of living standards?

Correct answer A. They exaggerate the inequality of living standards

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Question 02 Income Inequality

What effect will a spell of unemployment caused by a recession have on a worker’s income?

Correct answer D. It will reduce current income but not necessarily permanent income

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Question 04 Income Inequality

Under the maximin criterion from Rawls’s theory of justice, what should the government aim to do?

Correct answer D. Maximise the well-being of the worst-off person in society

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