Gov policies

• How can income redistribution and wage equality be achieved?

  Through government intervention
• What is an example of government intervention for wealth redistribution?

  Inheritance tax
• How has sustained economic growth affected poverty in Britain?

  It has helped reduce pre-War poverty
• How many people were lifted out of poverty in China between 1985 and 2001?

  450 million
• What was the economic situation in India during the 1980s and 1990s?

  Strong economic growth and falling poverty rates
• What type of tax system could governments employ to reduce inequality?

  Progressive taxes
• What characterizes a progressive tax?

  Higher average tax rates as income increases
• What is the personal allowance for income tax in the UK?

  £10,600
• What is the basic income tax rate for incomes below £31,785 in the UK?

  20%
• What tax rate do people pay for incomes between £31,786 and £150,000 in the UK?

  40%
• What tax rate is applied to incomes above £150,000 in the UK?

  45%
• How does a progressive tax system help reduce inequality?

  Lower income households pay less tax
• What is the basis for the progressive tax system?

  The payer's ability to pay
• What type of taxes are generally more progressive?

  Direct taxes
• What can progressive taxes allow the government to do?

  Reduce regressive taxes and raise welfare payments
• What is a potential downside of progressive taxes?

  Reduced incentives to work harder
• What does the Laffer curve illustrate?

  The relationship between tax rates and revenue
• How effective is the US welfare state at redistributing income?

  Not effective
• How does the tax system in Finland and Scandinavia differ from the US?

  Less progressive but collects more revenue
• What does the UK National Minimum Wage ensure?

  A minimum standard of living for workers
• What is the purpose of the National Minimum Wage?

  To prevent exploitation of workers
• How can developing countries improve human capital?

  By making education more widely available
• What might governments in developing countries do to stimulate economic growth?

  Diversify the economy
• What industry did Sri Lanka try to develop?

  Tourism industry
• How does government spending on housing and public services help society?

  Provides equal opportunities for all
• What is the outcome of providing public services like education and healthcare?

  Ensures a minimum standard of living
• What are the key components of a progressive tax system?

  • Higher rates for higher income earners
  • Personal allowance before taxation
  • Basic, higher, and additional tax rates
• What are the strengths and weaknesses of progressive taxation?

  Strengths:

  • Reduces income inequality
  • Provides funding for public services

  
  

  Weaknesses:

  • May discourage high earners
  • Potential decrease in government revenue