Question

'Government Budget can be a useful instrument in reducing inequalities in the distribution of income and wealth in an economy.'

Do you agree with the given statement? Present valid arguments in favour of your answer.

Answer 1

Yes, I agree with the statement that the government budget can be a helpful tool in lowering disparities in how wealth and income are distributed within an economy. Here are a number of solid pieces of evidence in support of this claim. 

1. Governments can use their financial authority to impose progressive taxation policies, where those with higher earnings pay more taxes. This reduces the income gap by shifting money from the rich to people with lower earnings. Wealth inequality can also be addressed via taxes on wealth, such as inheritance or property taxes.
2. Social spending initiatives like social welfare, housing, healthcare, and education can be funded by government budgets. These initiatives benefit lower-income people and families by offering them necessary services and support, which reduces poverty and income inequality. For example, funding education can increase earning potential and open doors for upward mobility for underprivileged people.