Question 10
[Maximum number: 1]
Which policy is most likely to contribute to people ending up in a poverty trap?
A
legal minimum wage
B
means-tested benefits
C
prevention of cheaper imports
D
proportional taxation
CAIE A-Level Economics 8.2.4 Poverty Trap
Practise identifying when extra earnings are offset by higher tax and withdrawn means-tested benefits and evaluating tax-free allowances or wage changes as ways to restore…
How this is tested
- trace an earnings rise through extra income tax and withdrawal of means-tested benefits
- identify a high effective marginal tax rate when disposable income barely rises with earnings
- evaluate larger tax-free allowances, slower benefit withdrawal or higher real minimum wages