Policies to Influence Income and Wealth Distribution in an Economy

The video discusses income and wealth inequality, exploring both interventionist and free market approaches. It explains how inequality is measured using the Lorenz curve and Gini index, and why addressing it is crucial. The interventionist approach advocates for redistributing wealth through taxation and benefits to stimulate growth, while the free market perspective views inequality as a natural byproduct of growth. The video also covers the Universal Credit system as a means to incentivize work and reduce reliance on benefits.

What are the two main tools used to measure inequality?

• Unemployment rate and CPI

• GDP and inflation rate

• Lorenz curve and Gini index

• Interest rates and stock market index

Why do interventionists believe inequality is a barrier to growth?

• It encourages excessive saving

• It limits consumption and economic expansion

• It leads to higher inflation

• It causes unemployment to rise

How does the taxation system contribute to reducing inequality?

• By implementing a progressive tax system

• By increasing taxes on low-income earners

• By lowering taxes for everyone

• By eliminating all taxes

What is a key concern of the free market approach regarding interventionist policies?

• They increase government revenue

• They reduce incentives to work

• They promote innovation

• They enhance economic stability

What is the purpose of the Universal Credit system in the UK?

• To provide free education to all citizens

• To eliminate all forms of welfare

• To increase taxes on high-income earners

• To provide a single monthly payment to simplify benefits