# VC310233_FinalExamFa - NEW YORK UNIVERSITY Department of Economics V/C31.0233 Poverty and Income Distribution Final Exam ANSWERS Answer all the

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NEW YORK UNIVERSITY Department of Economics V/C31.0233 Edward Wolff Poverty and Income Distribution Fall, 2007 Final Exam ANSWERS December 19, 2007 Answer all the questions. Make your answers brief and to the point. Use diagrams where necessary (and be sure to label the diagrams properly). Show all calculations. (There are 100 points in the exam). 1. Suppose the marginal tax rates for a single individual are as follows: (i) zero up to \$10,000; (ii) 10% from \$10,000 to \$49,999 (iii) 20% from \$50,000 to \$99,999; and (iv) 30% for incomes equal to or above \$100,000. A. Show the marginal tax rates on a diagram. [4 points ] B. Compute the average tax rate at the following income levels: (i) \$15,000; (ii) \$40,000; (iii) \$80,000 and (iv) \$150,000 . [ 16 points ] (i) ATR = [0 + (15000-10000)*.1] / 15000 = 500 / 15000 = 3.33% (ii) ATR = [0 + (40000-10000)*.1] / 40000 = 3000 / 40000 = 7.5% (iii) ATR = [0 + (50000-10000)*.1 + (80000-50000)*.2] / 80000 = (4000+6000) / 80000 = 12.5% (iv) ATR = [0 + (50000-10000)*.1 + (100000-50000)*.2 + (150000-100000)*.3] / 150000 = (4000+10000 + 15000) / 150000 = 19.33% MTR by Income 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0 10000 30000 49999 60000 80000 100000 120000 Income MTR MTR

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2. Calculate the Duncan and Duncan index for the following distributions: [15 points] Number of Number of Men Employed Women Employed ABS. Occupation
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## This note was uploaded on 07/11/2008 for the course ECON Vc310233 taught by Professor Wolff during the Spring '08 term at NYU.

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VC310233_FinalExamFa - NEW YORK UNIVERSITY Department of Economics V/C31.0233 Poverty and Income Distribution Final Exam ANSWERS Answer all the

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