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# output (income) per year will have to be produced in the world

How much more output (income) per year will have to be produced in the world
(a) Just to provide the 2.7 billion "severely" poor population with \$1 more output per day? \$ _______
(b) To raise the incomes of the world's "severely poor" population (income less than \$2 per day)
to the official threshold of U.S. poverty (roughly \$5,000 per year per person)? \$ ________

(a) Assuming a 10 percent sales tax is levied on all consumption, complete the following table:

Sales Percent of
Income Consumption Tax Income Paid in Taxes
\$10,000 \$12,000 ______ __________
20,000 18,000 ______ __________
40,000 32,000 _______ __________
80,000 60,000 ________ __________
(b) Is the sales tax progressive or regressive?

#### Solution Preview

How much more output (income) per year will have to be produced in the world

(a) Just to provide the 2.7 billion "severely" poor population with \$1 more output per day?

\$2.7 billion. It will be \$1 per person for 2.7 billion people.

(b) To raise the incomes of the world's "severely poor" population (income less than \$2 per day)
to the official threshold of U.S. poverty (roughly \$5,000 per year per person)?

\$13.5 trillion. ...

#### Solution Summary

This solution evaluates the sales tax as progressive or regressive.

\$2.19