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- Subject
- Income Inequalityeconomics-mcqs › income-inequality
- Published
- 1 Jun 2019
- Last updated
- 28 May 2026
What does the term 'poverty trap' mean?
Multiple choice question for Income Inequality. Select an option, then review the explanation below.
Explanation
The poverty trap describes a situation where individuals receiving government assistance find that working additional hours results in little or no net income gain because the increase in earnings reduces their benefit payments and raises their tax liabilities, thereby discouraging them from increasing their work effort.
More Income Inequality MCQs
Practice related questions from the same subject.
- 1.Which of the following best describes the Benazir Benefit Income Scheme?
- 2.Which category of tax does VAT best represent?
- 3.When a tax can be transferred, what determines the actual burden of the tax?
- 4.What does tax incidence refer to?
- 5.What does a progressive income tax system imply about the tax rate for individuals with higher earnings?