ECONOMICS
INCOME DISTRIBUTION
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Positive effect to an unequal distribution of income and wealth
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Negative effect to an unequal distribution of income and wealth
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Either A or B
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None of the above
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Detailed explanation-1: -Economic. Less equal societies have less stable economies. High levels of income inequality are linked to economic instability, financial crisis, debt and inflation.
Detailed explanation-2: -Economic inequality is the unequal distribution of income and opportunity between different groups in society. It is a concern in almost all countries around the world and often people are trapped in poverty with little chance to climb up the social ladder.
Detailed explanation-3: -Societies with pronounced economic inequality suffer from lower long-term GDP growth rates, higher crime rates, poorer public health, increased political inequality, and lower average education levels.
Detailed explanation-4: -Thus, rising inequality impedes economic growth by reducing the average amount of physical capital investment and human capital accumulation. On the other hand, high-income groups are a major part of society’s wealth, and if they invest in it primarily, it will promote economic growth (Bourguignon, 1981. (1981).