Social Welfare Measures Quiz

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Which concept refers to the idea that individuals in similar economic situations should be treated equally by the government?

Progressive taxation

Deadweight loss

Horizontal equity (correct)

Vertical equity

What is a potential consequence of high tax rates on the wealthy according to the text?

Increased entrepreneurship

Enhanced welfare activities by the government

Negative impact on economic output (correct)

Encouragement of savings and investments

How does the text suggest governments can achieve greater equity through taxation?

Implementing flat tax rates for all income levels

Imposing high tax rates on the rich (correct)

Decreasing tax compliance for high-income individuals

Reducing tax rates for lower-income groups

What conflict arises when governments emphasize redistribution to achieve equity?

Conflict between consumer choices and producer choices Signup and view all the answers

What term is used to describe the efficiency costs associated with government redistribution policies?

Deadweight losses Signup and view all the answers

How can an optimal budgetary policy address the conflict between efficiency and equity?

By striking an appropriate trade-off between efficiency and equity Signup and view all the answers

What is the main objective of redistribution policies?

To ensure horizontal equity and fairness Signup and view all the answers

Which of the following is NOT a cause of market failures mentioned in the text?

Perfect information Signup and view all the answers

How can governments influence resource allocation in the economy?

Through regulatory and discretionary policies Signup and view all the answers

What is one of the ways governments can achieve the distributive function of the budget?

By redistributing income through taxation and public expenditure Signup and view all the answers

Which action is NOT associated with the role of governments in correcting market failures?

Incentivizing monopolistic practices Signup and view all the answers

Why should redistribution measures be accomplished with minimal efficiency cost according to the text?

To minimize deadweight losses or efficiency costs Signup and view all the answers

What is the main goal of the Competition Act in India?

Promote competition and prevent anti-competitive activities Signup and view all the answers

Why does the government intervene in income and wealth distribution?

To ensure a more socially optimal and egalitarian distribution Signup and view all the answers

Which ideology put pressure on governments to play a redistributive role?

Socialist ideology Signup and view all the answers

How does the government redistribute income and wealth through the budget?

Through the expenditure side or the revenue side of the budget Signup and view all the answers

Why is it important for the government to intervene in income and wealth distribution?

To counter skewed distribution from the market Signup and view all the answers

What is the distributive function of the budget concerned with?

Deciding 'for whom' an economy should produce goods and services Signup and view all the answers