4.1.7.3 Government policies to alleviate poverty and influence income and wealth distribution Quiz: AQA Economics, Unit 1

The 20 questions

1. Which policy directly redistributes income from high earners to low earners?

   • Regressive taxation
   • Progressive taxation
   • Deregulation
   • Proportional taxation

2. Universal Credit eligibility depends on household income and savings. This makes it a:

   • Regressive tax
   • Universal benefit
   • Contributory benefit
   • Means-tested benefit

3. Which tax directly redistributes wealth rather than income?

   • Inheritance tax
   • Value added tax
   • Corporation tax
   • Income tax

4. Setting a National Minimum Wage above the market-clearing rate can cause:

   • Demand-pull inflation
   • Real wage unemployment
   • Fiscal drag
   • Labour shortages

5. Rapid withdrawal of means-tested benefits as earnings rise creates a:

   • Negative externality
   • Work disincentive
   • Positive multiplier
   • Liquidity trap

6. Which policy directly improves the long-term earning capacity and skills of low-income workers?

   • Value added tax
   • State pension increases
   • Education and training
   • Regressive taxation

7. What is a primary disadvantage of providing universal benefits to all households regardless of income?

   • High fiscal cost
   • High stigma effect
   • Strong poverty trap
   • Low benefit take-up

8. High rates of income tax and generous benefits can create a trade-off between equity and what?

   • Surplus
   • Efficiency
   • Inflation
   • Externalities

9. Which policy directly reduces the concentration of wealth rather than targeting flow of income?

   • National insurance
   • Inheritance tax
   • Universal credit
   • Income tax

10. Which measure is a supply-side policy designed to reduce poverty by increasing human capital?

    • Training schemes
    • Income tax cuts
    • Child benefit
    • Jobseeker's allowance

11. Increasing the income tax personal allowance directly increases which measure for low earners?

    • Inflation rate
    • Gross wage
    • Disposable income
    • Marginal tax rate

12. Which government initiative is an example of direct in-kind provision to alleviate poverty?

    • Universal credit
    • Free school meals
    • State pension
    • Working tax credit

13. How does a progressive tax system reduce post-tax income inequality across households?

    • Higher marginal rates
    • Flat tax rates
    • Equal tax payments
    • Higher regressive taxes

14. What is the main distributional effect of funding child benefit through higher income tax rates?

    • Eliminated wealth gap
    • Income redistribution
    • Lower overall borrowing
    • Zero economic cost

15. What is a potential negative economic consequence of imposing very high marginal tax rates?

    • Reduced work incentives
    • Higher productivity growth
    • Increased labour supply
    • Lower budget deficit

16. Why might a government choose in-kind benefits over direct cash transfers to low-income households?

    • Lower administrative cost
    • Higher inflation control
    • Greater consumer choice
    • Guaranteed targeted spending

17. Why do economists and policymakers disagree on the best policies to alleviate poverty?

    • Differing moral perspectives
    • Constant interest rates
    • Lack of data
    • Fixed tax revenues

18. What is the primary economic objective of offering in-work tax credits to low-income households?

    • Higher inflation rates
    • Higher interest rates
    • Maximised tax revenues
    • Increased work incentives

19. Which policy action directly reduces the severity of the poverty trap for low-income workers?

    • Higher marginal taxes
    • Lower personal allowances
    • Lowering withdrawal rates
    • Higher sales taxes

20. Why might a housing benefit subsidy fail to fully benefit low-income tenants in private housing?

    • Housing supply increases
    • Rents drop rapidly
    • Landlords raise rents
    • Tenants stop working

Related quizzes

• Economic methodology Quiz · 4.1.1.1 · 20 questions
• The nature and purpose of economic activity Quiz · 4.1.1.2 · 20 questions
• Economic resources Quiz · 4.1.1.3 · 20 questions
• Scarcity, choice and the allocation of resources Quiz · 4.1.1.4 · 20 questions
• Production possibility diagrams Quiz · 4.1.1.5 · 20 questions
• Consumer behaviour Quiz · 4.1.2.1 · 20 questions
• Imperfect information Quiz · 4.1.2.2 · 20 questions
• Aspects of behavioural economic theory Quiz · 4.1.2.3 · 20 questions
• Behavioural economics and economic policy Quiz · 4.1.2.4 · 20 questions
• The determinants of the demand for goods and services Quiz · 4.1.3.1 · 20 questions