2.1.1 Inequality

Question 1

Why is there income inequality

Answer 1

Workers have natural talent, good education or work experience
People who do not like to work receive lower (pensions)
People who own assets enjoy more

Question 2

Absolute poverty

Answer 2

Where people don’t have enough resources to meet their basic human needs

Question 3

Relative poverty

Answer 3

Poverty that is defined relative to educating living standards of an average individual
Income falls short
Can be measured by the number of households who have a total income lower than the median income of the nation

Question 4

Why meet basic needs should reduce poverty

Answer 4

People are starving.

Avoid loss of people

Question 5

How can reduction of poverty help living standards

Answer 5

Living standards would rise and nations income rise
May have social and health problems.

.

Question 6

How progressive taxation helps

Answer 6

Progressive tax- increasing income tax as income increases
Regressive- stopping tax on poor
If government uses this technique the gap my close because higher income people pay more tax but if average income is rising people at the top of the scale will benefit.

Question 7

Redistribution through benefit payments

Answer 7

Use tax revenue to help those with low income
Help with disabled and the sick and single family

However can cause a disincentives
There could be opportunity cost
Not everyone entitled to receive it so may face resentment

Question 8

Investment in education and healthcare

Answer 8

If people are educated they can develop a range of skills so they will be more employable
Schools offer a safe environment t.
But investment in education can be expensive and may take years to have an effect

Healthcare can increase life expectancy and reduce suffering so they become more productive and help with economic growth.