Consider 2 distributions of consumption for 4 persons. Poverty line = 3.01
- A distribution is (1,2,3,4)
- B distribution is (2,2,2,4)
By a transfer from the least poor person (individual with '3' in A) to the poorest.
a. The poverty gap will be reduced by such a transfer.
b. The poverty gap will be unaffected by such a transfer.
c. The poverty gap will be unaffected, but the poverty gap index will be reduced.
d. The poverty gap will be unaffected but the poverty gap index will be increased.
e. but the poverty gap index will be reduced.
Answer: B