Question

What does the government do to change the distribution of income?

• A. More taxes from the rich
• B. More expenditure on the poor
• C. Provision of public goods
• D. All of these

Hint:

Governments aim to reduce income inequality by using taxes, social spending, and providing essential public services.

Answer 1

The Correct Option is D

Step 1: Understanding the role of the government in income distribution.
Governments can address income inequality through various mechanisms, such as taxation, social spending, and providing public goods. These methods help redistribute income from the wealthy to the poor, improving equity in the economy.

Step 2: Analyzing the options.
(A) More taxes from the rich: Correct. Progressive taxation, where the rich pay higher taxes, is a key method for redistributing income.
(B) More expenditure on the poor: Correct. Government programs such as welfare and subsidies help increase the income of the poor.
(C) Provision of public goods: Correct. Providing public goods like education and healthcare can help improve the living standards of the poor, reducing income inequality.
(D) All of these: Correct. All of the options listed are used by the government to change the distribution of income.

Step 3: Conclusion.
The correct answer is (D) All of these, as governments use a combination of taxes, spending, and provision of public goods to change income distribution.