Income Inequality MCQs

Correct answer A. They exaggerate the inequality of living standards

Correct answer D. It will reduce current income but not necessarily permanent income

Correct answer D. Permanent income

Correct answer D. Maximise the well-being of the worst-off person in society

Correct answer B. By redistributing income from rich to poor because, owing to diminishing marginal utility of income, taking a pound from the rich reduces their utility by less than the gain from giving that pound to the poor

Correct answer C. Such redistribution would remove the incentive to work hard, so society's total income would fall and the least well-off person would be worse off than under a system with some income inequality

Correct answer A. Benefits are reduced at such a high rate when recipients earn more income that there is little or no incentive to work once receiving benefits

Correct answer C. A situation in which those receiving state benefits may be almost no better off if they work more, because doing so reduces the benefit income they are entitled to and increases the tax they pay

Correct answer B. Derived demand

Correct answer B. Leisure becomes more expensive and households buy less of it

Correct answer D. Increase the supply of labour

Correct answer D. Compensating differentials

Correct answer A. The wage rate

Correct answer A. (MPL) (PX)

Correct answer D. The Rs500 weekly salary that he has forgone and the monetary costs incurred by continuing to search

Correct answer B. Both the wages and the marginal productivity of men will be higher than they otherwise would be

Correct answer A. The return to any factor of production that is in fixed supply

Correct answer B. A commonly used measure of the degree of inequality in an income distribution

Correct answer A. One family has all the income and everyone else has nothing

Correct answer D. Those with equal ability to pay should bear equal tax burdens