Economics MCQs

Page No. 221

Because people’s income vary other the life cycle and because there are transitory shocks to people’s incomes the standard measures of income distribution ?


aexaggerate the inequality of living standards


bcould exaggerate or understate the inequality of living standards depending on whether the transitory shocks are positive or negative


c understate the inequality of living standards


d accurately represent the true inequality of living standards



Permanent income is ?


a Social Security income of the elderly and disabled


bnone of these answers


cwages fixed by a union or other labour contract


da person’s normal or average income



In Pakistan the term the poverty trap is used to describe the fact that ?


apoor people are excluded from most leisure and social activities


b the Pakistan benefit system makes being poor vary degrading


c if poor people earn more their benefits fall, making them no better off.


d in the Pakistan poor people are heavily taxed



Housing Benefit is a good example of ?


aa means tested cash benefit


ba universal (social insurance based) benefit


ca benefit in kind


d none of the above



An example of an indirect tax is ?


aincome tax


bVAT


c a tax on profits.


d inheritance tax


View Answer VAT

Tax shifting ?


ais the way in which a tax is structured


b occurs when households can alter their behaviour and do something to avoid paying tax


coccurs when taxes cause prices to increase but wages to fall.


d is the ultimate distribution of a tax’s burden



A tax whose burden expressed as a percentage of income, falls as income increases is a ?


abenefits received tax


bprogressive tax


cregressive tax


d proportional tax


View Answer regressive tax

A tax whose burden is the same proportion of income for all households is ?


aan equal tax


b a proportional tax


ca progressive tax


da regressive tax


View Answer a proportional tax

The total amount of tax you pay divided by your total income is the ?


aaverage tax rate


b marginal tax rate


cproportional tax rate


dtotal tax rate


View Answer total tax rate

Horizontal equity holds that ?


athose with equal ability to pay should bear unequal tax burdends.


bthose who benefits the most from government services should bear the higher tax burden.


cthose who benefit the most from government services should have the greatest voice in determining what gets produced


d those with equal ability to pay should bear equal tax burdens.



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