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28 June, 14:43

Which of the following is not correct?

A. Many measures of inequality are based on income, which may not reflect a person's standard of living.

B. Because many of the poorest families receive in-kind transfers, more families have lower standards of living when compared to poverty rates based on income.

C. Because people can borrow and save to smooth out life cycle changes in income, equality measures based only on income may not reflect a person's standard of living.

D. A person's standard of living depends more on her permanent income than her transitory income, so inequality measures based on current income may be misleading.

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  1. 28 June, 14:52
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    Which of the following is not correct? B. Because many of the poorest families receive in-kind transfers, more families have lower standards of living when compared to poverty rates based on income.

    Explanation:

    To understand this, we have to analyze the options:

    a) It is correct that many inequality instruments are only based on income. But not all of them, that is why many are perfectly used. So it's not the correct answer, but it's correct.

    c) it is also true because it is again recalling the income as a wrong medium to measure equality. Even though this time is in the form of loans or savings.

    d) it is true because many times people don't have permanent ways of income but temporary. So this biases the data.

    b) is not correct because in-kind transfers have been an effective way to fight poverty and they don't delimit a family to a lower standard. This is not a known fact, but an assumption based on a belief. Because it could be true or not, based on the posture of the family of study and the use they assign to the transfers.
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