Topic Questions (MCQ – HARD): Government policies to promote equity – 3auk

Currently, the value of government benefits that households can receive is determined by their income level.

What would alleviate the impact of the resulting poverty trap?

promoting awareness of eligible benefits among households

raising the amount of government benefits provided

lowering the rate at which benefits decrease as household income rises

directing benefits towards those with the greatest need

Individuals have the freedom to decide their working hours, savings rate, and consumption choices.

Which type of tax will have the least distortionary effect on individuals' choices?

A tax imposed on the total wealth individuals have accumulated.

A flat tax that collects a fixed amount from all individuals.

Indirect taxes imposed on specific goods.

Income taxes levied at a proportional rate.

What indicates that a society has achieved equity in terms of income distribution?

When all individuals have equal access to job opportunities.

When workers are compensated based on their marginal value product.

When income is evenly distributed within the society.

When the society perceives the income distribution as fair.

A government aims to promote a fairer distribution of income within the country.

Which combination of policy measures is likely to be the most effective in achieving this goal?

reduce tax-free income allowance; decrease means-tested benefits

reduce tax-free income allowance; reduce universal benefits

increase tax-free income allowance; increase means-tested benefits

increase tax-free income allowance; increase universal benefits