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Economics · Oct / Nov 2024 · Paper 13 · Question 24

2281Fiscal policy

A government increases the rate of progressive income tax and its spending on hospitals. What is likely to happen to the distribution of income and to living standards?

  1. Adistribution of income: becomes less even; living standards: fall
  2. Bdistribution of income: becomes less even; living standards: rise
  3. Cdistribution of income: becomes more even; living standards: fall
  4. Ddistribution of income: becomes more even; living standards: rise

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Correct answer: D. distribution of income: becomes more even; living standards: rise

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