Econ Unit 4

What is the primary source of income for each of the four sectors of the economy?

• Households earn income from taxes, businesses from government grants, government from exports, and foreign sector from domestic purchases.
• Households earn income from wages and salaries, businesses from profits, government from taxes, and foreign sector from exports and imports.
• Households earn income from exports, businesses from government subsidies, government from foreign investments, and foreign sector from domestic taxes.
• Households earn income from capital gains, businesses from wages, government from household spending, and foreign sector from taxes.

What are the main causes of inequality in the distribution of income?

• High taxation rates, universal healthcare, government-provided housing, and standardized wages.
• Equal access to education, government subsidies, balanced employment opportunities, and uniform skill levels.
• Differences in education, discrimination, disparities in access to resources, and taxes
• Uniform wages across sectors, equal distribution of resources, and consistent access to healthcare and education.

Why is the number of people in poverty increasing while the poverty rate remains steady?

• Population growth adds more people overall, so even with a steady poverty rate, the absolute number of people in poverty increases.
• The poverty threshold is adjusted frequently to account for inflation, causing more people to fall below the line.
• The poverty rate only measures the income gap between the rich and poor, not the actual number of people in poverty.
• Government assistance programs are reducing poverty rates but not enough to keep the total number of people in poverty from rising.

What would you expect to happen if the Federal Reserve promoted a lower interest rate on loans?

• Inflation would decrease immediately as consumers save more money.
• Borrowing would decrease, and consumer spending would decline.
• The value of the dollar would strengthen significantly, reducing exports.
• Borrowing would increase, leading to higher consumer spending and business investments.

How does inflation affect consumers?

• Inflation increases the purchasing power of consumers, allowing them to buy more goods and services.
• Inflation decreases the cost of borrowing, making it easier for consumers to purchase homes and cars.
• Inflation reduces the value of money, making goods and services more expensive for consumers.
• Inflation increases savings rates, allowing consumers to save more for future expenses.

How does education affect employment?

• Education has no impact on employment since most jobs do not require specific skills.
• Education only affects employment in technical fields, with no impact on other industries.
• Higher education levels lead to fewer job opportunities due to increased competition.
• The higher the education level, the less likely a person is to be unemployed.

What is the relationship between the unemployment rate and recessions?

• The unemployment rate increases during recessions
• The unemployment rate decreases during recessions
• Unemployment rates remain unchanged during recessions because the government provides enough job opportunities.

What is a regressive tax?

• A tax that takes a larger percentage of income from higher-income earners than from lower-income earners.
• A tax that takes the same percentage of income from all taxpayers, regardless of their income level.
• A tax that takes a larger percentage of income from lower-income earners than from higher-income earners.
• A tax that is only applied to businesses and corporations, not individuals.

Why is sales tax considered a regressive tax?

• It applies only to luxury goods, which are mostly purchased by high-income individuals.
• It takes a larger percentage of income from low-income earners, as they spend a higher proportion of their income on taxable goods.
• It is a flat rate tax, meaning higher-income individuals pay more in total, but not a larger percentage.
• It exempts essential goods like food and medicine, making it fairer to low-income earners.

What are the two largest sources revenue for the federal government?

• Sales taxes and corporate taxes.
• Income taxes and Social Security taxes.
• Property taxes and excise taxes.
• Tariffs and inheritance taxes.