Question

Question 1

The poverty rate is the level of income for each family size, below which each family is considered to be in poverty.

	True
	False

Question 2

The negative income tax is designed to collect taxes from high income groups and distribute to lower income groups.

	True
	False

Question 3

The diminishing marginal product refers to the property whereby the marginal product of an input declines as the quantity if the input increases.

	True
	False

Question 4

Capital refers to the money being used to purchase goods and services

	True
	False

Question 5

A compensating differential is a difference in wages that arises to offset the non-monetary characteristics of different jobs.

	True
	False

Answer 1

(1) False

Poverty rate is proportion of people falling under the poverty line. It is not an absolute number.

(2) True

Negative income tax rate gives people below a cut-off income an amount, instead of collecting tax from them.

(3) True

With increase in input, value of output starts to fall, which is called diminishing marginal product.

(4) False

Capital includes physical capital (plant/equipment), financial capital (money) and human capital (skill-set).

(5) True