Ch. 80 The Redistribution Of Income And Wealth

Question 1

Methods to change distribution of wealth and income? (3)

Answer 1

Government expenditure
Taxation
Legislation

Question 2

Explain how government expenditure can be used to redistribute income? (3)

Answer 2

• Monetary benefits to poor (SS and NI benefits > 30% gov. ex.)
• Direct aid (providing cheap, safe homes for elderly and clothes for children)
• Provision of G&S -> equal opportunity (education provision etc)

Question 3

Explain how different types of taxation can be used to redistribute income? (3)

Answer 3

Progressive tax - proportion paid increase with income (income tax)

Regressive tax - proportion paid decreases as income increases

Proportional tax - proportion paid stays the same as income increases (VAT)

Question 4

Explain how legislation can be used to redistribute income? (3)

Answer 4

• raise min wage -> higher income for poorest
• retraining to help unemployed get jobs
• laws against discrimination

Question 5

Why is it redistribution of income and wealth needed? (3)

Answer 5

Eradicate absolute poverty
Eradicate relative poverty
Create horizontal equity (men and women getting paid equally etc)