Chapter 19

Wealth refers to

The market value of assets people own.

The poverty rate is

The percentage of the population that is counted as poor.

The richest fifth of U.S. households get nearly half of all U.S. income.

True

According to the standard theory of distribtuion, wages should be equal to:

productivity

nominal tax rate

(b) The nominal tax rate is tax paid divided by taxable income.Tax paid is calculated as follows: $9,075 x 0.10 = $907.50 $27,825 x 0.15 = $4,173.75 $52,450 x 0.25 = $13,112.50 $97,000 x 0.28 = $27,160.00 $13,650 x 0.33 = $4,504.50 Tax paid = $49,858.25 In this case, tax paid is $49,858.25 and taxable income is $200,000, so the nominal tax rate is therefore 25% (= $49,858.25 / $200,000).

regressive tax

(d) A regressive tax is a tax system in which tax rates fall as wages rise. In the case of the Social Security payroll tax, as wages rise (particularly above $117,000), the tax rate falls.

According to official U.S. statistics, the U.S. poverty rate has been approximately _____ percent for the last 40 years.

11 to 15

If the area between the diagonal line of absolute equality and the Lorenz curve is greater for China than for the United States, we can conclude that the

Distribution of income in China is less equal than in the United States.

Check all the options that are possible explanations for why inequality in the US has increased since the 1970s

declining union membership rates return on capital exceeds the growth rate of wages