Equity, Poverty and Redistribution
83 questions· page 1 of 9
When does a more equal distribution of income occur?
Options
A when a country’s income tax system is made more progressive
B when someone is made better off without making someone else worse off
C when the best use is made of scarce resources
D when there is an increase in the Gini coefficient
What could result in an individual being caught in the poverty trap if their income increases?
Options
A national minimum wage is changed
B benefits payments are means-tested
C subsidised housing payments for low-income earners are increased
D the income level at which income tax is first paid is increased
A worker has a low wage. They have little incentive to earn extra income because they will pay more income tax and receive fewer means-tested benefits.
What describes this worker’s situation?
Options
A employment trap
B liquidity trap
C poverty trap
D unemployment trap
What could result in an individual being caught in the poverty trap if their income increases?
Options
A national minimum wage is changed
B benefits payments are means-tested
C subsidised housing payments for low-income earners are increased
D the income level at which income tax is first paid is increased
Which policy is most likely to contribute to people ending up in a poverty trap?
Options
A legal minimum wage
B means-tested benefits
C prevention of cheaper imports
D proportional taxation
A government has a policy where income tax is paid only after the first $20 000 of income has been earned.
What would make the government's policy more equitable?
Options
A Decreasing the threshold for paying income tax to $10 000 for all taxpayers.
B Integrating the tax and welfare systems by introducing a negative income tax.
C Introducing universal benefits that are available to all citizens irrespective of wealth.
D Means testing all benefits so that they remain the same even if real incomes fall.
A government funds an increase in transfer payments to the unemployed by increasing the higher rate of income tax.
What is the most likely impact of this change?
Options
A government borrowing increases
B the incentive to work increases
C the marginal propensity to consume increases
D the quantity of imports increases
A government reduces both the income tax paid by all earners and the amount of means-tested benefits paid to those receiving low or no incomes.
What is most likely to be its objective?
Options
A a more equitable income distribution
B a reduction in the rate of inflation
C a reduction in the trade deficit
D an increase in the rate of economic growth
Which of these actions illustrates equality rather than equity?
Options
A A firm that installs ramps to its workplace to improve the access for people with disabilities.
B A government subsidy on rice of $0.10 per kilo for all members of the public.
C A university admissions policy that offers places to students from disadvantaged socio-economic backgrounds.
D An income tax system where high-income earners pay a higher percentage of income as tax.
Which combination of policies is most likely to reduce the number of low-paid workers caught in the poverty trap?
Options
| individual’s tax-free allowance for income tax | national minimum wage in real terms | |
|---|---|---|
| A | decrease | increase |
| B | decrease | unchanged |
| C | increase | increase |
| D | increase | unchanged |