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Chapter 15: Q.28 (page 378)

Identify some public policies that can reduce the

level of economic inequality.

Short Answer

Expert verified

-Opportunity hierarchy

-Wealth redistribution

-Incentives and Income Equality tradeoff

Step by step solution

01

Step 1.Meaning 

Economic inequality means unequal distribution of income among individuals in a group.

02

Step 2. Opportunity hierarchy 

Income inequality can be reduced by proving the same level of opportunities to every child, irrespective of the place and region they have grown up.

For example, a student from a low-income area attending an underfunded school may have the same skill set but fewer opportunities than compared to a student from high-quality education create the difference.

03

Step 3. Wealth redistribution

Redistribution of wealth by taking it from the high-income group and providing it to the low-income group can help balance the distribution of wealth. This can occur in the form of taxation which is used for subsistence programs for those who need it.

04

Step 4. Incentives and Income Equality tradeoff 

Imposing high taxes on high-earning groups can discourage them from working and will impact incentives as well & that discouragement leads to the balanced distribution of income.

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Most popular questions from this chapter

Exercise 15.2 and Exercise 15.3 asked you to

describe the labor-leisure tradeoff for Jonathon. Since,

in the first example, there is no monetary incentive for

Jonathon to work, explain why he may choose to work

anyway. Explain what the opportunity costs of working

and not working might be for Jonathon in each example.

Using your tables and graphs from Exercise 15.2 and

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