“There is a ......... correlation between GDP per capita and Size of Government (measured by Revenues...

“There is a ......... correlation between GDP per capita and Size of Government (measured by Revenues as a percentage of GDP). There is a ......... correlation between GDP per capita and Redistribution (measured by difference between Pre- and Post-tax-and-transfer Income Gini).”

Which of the following combination of words correctly fill in the blanks?

A.Negative, Negative.

B.Positive, Postitive.

C.Positive, Negative.

D.None of the others.

Solutions

Expert Solution

Answer: B

EXPLAINATION: There is a positive correlation between GDP per capita and Size of Government (measured by Revenues as a percentage of GDP).

As Rule of law is an important factor in determining income per capita.Also according to Wagner's law Size of the government and income per capita are positively correlated.

There is a positive correlation between GDP per capita and Redistribution (measured by difference between Pre- and Post-tax-and-transfer Income Gini).

GDP per captial and redistribution which helps in reducing inequalities in the society, further help in economic growth via skilled labour and better Human development indicators leads to rise in GDP per capita.

Rahul Sunny answered 1 year ago

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