Question 1

Philosopher John Rawls generally argued for greater income equality. Under what conditions would he have argued against greater equality of income?

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Question 2

The following diagram shows three Lorenz curves for the country of Ecoland. Based on this diagram, describe what happened to the distribution of income in Ecoland between 1956 and 20. What happened to the Gini Coefficient?

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Question 3

"To eliminate poverty, all we need to do is tax the millionaires and billionaires sufficiently, and spread the money around among the poor based on who needs it the most." Do you agree or disagree with this statement? Why?

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Question 4

The following diagram shows three Lorenz curves for countries A, B, and C. The area between the Lorenz curve and the diagonal is 1,000 for Country A, 2,000 for Country B, and 2,500 for Country C. (The entire area under the diagonal is 5,000 because the area of the triangle is ½ × (base × height) = ½ × (100 × 100) = 5,000.)
(1) Calculate the Gini coefficient for each country.
(2) Based on the Gini coefficient, which country has the most equal distribution of income? Which country has the least?

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Question 5

How does the distribution of income compare to the distribution of wealth in the U.S.? What does this imply about the respective Lorenz curves?

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Question 6

Economists often use a Lorenz curve to describe income distribution. What are two other approaches to the measurement of income distribution?

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Question 7

What is the distributive effect of the Social Security tax? Explain.

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Question 8

Describe three methods of affecting income distribution in the U.S.

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Question 9

What are the distributive consequences of each of the following taxes: the U.S. income taxes, sales taxes, and property taxes? Are they progressive, regressive, or proportional?

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Question 10

Which of the three types of tax systems (progressive, proportional, regressive) redistributes income? Explain.

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Question 11

Use the table below to answer the questions.
(a) Draw a Lorenz curve for countries A, B, and C in the table below.
(b) Which country has the least equal distribution of income? The most equal distribution?
 $$\begin{array} { l l l l } 
& { \text { Percent of Income } } \
\text { Quirtile } & \text { A } & \text { B } & \text { C } \
\hline \text { Lowest } & 8.5 & 10.2 & 2.3 \
\text { fifth } & & & \
\text { Second } & 10.1 & 15.2 & 6.1 \
\text { fifth } & & & \
\text { Third fifth } & 12.5 & 18.3 & 12.3 \
\text { Fouth fifth } & 15.1 & 23.1 & 18.1 \
\text { Highest } & 53.8 & 33.2 & 61.2 \
\text { fifth } & & &
\end{array}$$

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Question 12

When measuring income distribution according to class, how does the U.S. compare to most developing countries?

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Question 13

Is an equal distribution of income always the fairest distribution? What problems may arise when assessing the fairness of an equal distribution?

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Question 14

The text discusses ten expenditure programs used in the U. S. to redistribute income. Briefly describe any five of them.

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Quiz 18: Who Gets What the Distribution of Income