4.2.2 Policies To Reduce Inequality

Question 1

How can higher minimum wage reduce inequality?

Answer 1

• increasing the minimum wage allows the income inequality gap to close
• increases in people to incentivise to work

Question 2

How does free provision of service reduce inequality? For instance NHS

Answer 2

• this can allow human capital to increase = can decrease the inequality gap as more people are working

Question 3

Evaluation for free provision of information?

Answer 3

• depending on the quality
• government rev can decrease = may not be able to afford
• time lag
• opportunity cost
• can lead to a free rider problem

Question 5

How can higher income tax reduce inequality?

Answer 5

• top rate of income tax might be raised
• this can allow those with lower income to have more disposable income = consumer spending increases

Question 6

Eval for high income tax

Answer 6

• tax avoidance

Question 7

How can investment in training lead to a reduction on inequality

Answer 7

• allows a more skilled workforce = less people are unemployed
• increase human capital

Question 8

How can we overcome inequality?

Answer 8

• fiscal policies
• monetary policies
• supply side policies