Not guaranteed people will spend extra money/extra disposable income, they might save it or spend it on imported goods and services - which could lead it a balance of payments deficit
1 of 5
What measures does the government use to redistribute incomw and wealth
• government has policy of income and wealthy distribution- so tax and gov spending is used to reduce inequalities • Progressive taxes help redistribute income for lower income groups by taking higher percentage in tax from higher income groups
2 of 5
Opportunity cost of fiscal policy
Extra health and education spending could mean less spending in other areas,so higher taxes- less for consumers to spend .
3 of 5
What else does government do to redistribute income and wealrh
Inheritance Tax – wealth, increase government spending – social protection benefits, increase disposable incomes for those households, health and education aswell.
4 of 5
What else
Reduce indirect taxes, but Uk doesn’t heavily tax necessities like food, baby clothes
5 of 5
Other cards in this set
Card 2
Front
What measures does the government use to redistribute incomw and wealth
Back
• government has policy of income and wealthy distribution- so tax and gov spending is used to reduce inequalities • Progressive taxes help redistribute income for lower income groups by taking higher percentage in tax from higher income groups
Card 3
Front
Opportunity cost of fiscal policy
Back
Card 4
Front
What else does government do to redistribute income and wealrh
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