Which of the following statement(s) is/are true?

1. The government uses Monthly Per Capita Expenditure (MPCE) as a proxy for the income of households to identify the poor.
2. Economists state that it differentiates between the very poor and the other poor.
3. The above mechanism takes into account expenditure on food and a few select items as proxies for income.
4. It is helpful in identifying the poor as a group to be taken care of by the government, but it would be difficult to identify who among the poor need help the most.

A, C, and D

The government uses Monthly Per Capita Expenditure (MPCE) as a proxy for the income of households to identify the poor. But there are certain limitations attached to it. Economists state that a major problem with this mechanism is that it groups all the poor together and does not differentiate between the very poor and the other poor. Also, this mechanism takes into account expenditure on food and a few select items as a proxy for income, economists question its basis. This mechanism is helpful in identifying the poor as a group to be taken care of by the government, but it would be difficult to identify who among the poor need help the most.