Practice Quiz

CLEP Economics Exam Prep

Category - Economics

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How do federal income taxes and transfer payments, such as unemployment compensation, affect the distribution of personal income in the United States after taxes and transfers?
  1. Federal income taxes make the distribution of income more equal, but transfers make it less equal.
  2. Federal income taxes make the distribution of income less equal, but transfers make it more equal.
  3. Both federal income taxes and transfers make the distribution of income less equal.
  4. Both federal income taxes and transfers make the distribution of income more equal.
Explanation
Answer: D - Both federal income taxes and transfers make the distribution of income more equal.
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