Economics 9708 · AS & A Level · Taxes and subsidies

Taxes and subsidies — practice question

Which government policy used to reduce the effects of income inequality is paired correctly with one of its benefits and one of its drawbacks?

  • Apolicy: food stamps for the poor; advantage: targets the needy; disadvantage: high administrative costs
  • Bpolicy: higher national minimum wage; advantage: encourages skill training; disadvantage: higher budget deficit
  • Cpolicy: provision of free child care; advantage: increases employability; disadvantage: disincentive to work
  • Dpolicy: universal monetary benefits; advantage: saves on bureaucracy; disadvantage: reduced labour mobility

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