Economics 9708 · AS & A Level · Taxes and subsidies

Taxes and subsidies — practice question

(a)[2]

The article states that many in the US believe inequality is not equitable. What is the difference between equality and equity?

(b)[4]

Using the article, explain two ways in which inequality is seen as harmful.

(c)[6]

Do the changes in real annual pay shown in Fig. 1.1 back up the idea that inequality is increasing in the US?

(d)[8]

The article mentions reducing inequality by means of taxation. Discuss the effectiveness of fiscal policy in redistributing income.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: Equity means fairness and is a normative concept

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