Arguments for uneven distribution of income and wealth, Managerial Economics

Arguments for Uneven Distribution of Income and Wealth

The basic economic argument to justify large income inequality was the assumption that high personal and corporate incomes were necessary conditions for saving which made possible investments and economic growth through mechanism such as the Harrod-Domar Model.  In this argument it is maintained that the rich save and invests a significant proportion of their incomes while the poor spend all their incomes on consumer items, and since GNP growth is assumed to be directly related to the proportion of National Income saved then an economy characterised by highly unequal distribution of income would save more and grow faster than one with more equitable distribution of income.  It was also assumed that eventually National per capita income would be high enough to allow for a sizeable distribution of income via Taxes and subsidies but until such time is reached, any attempt to redistribute income significantly could only serve to lower growth rate and delay the time when a large income cake would be cut up into smaller sizes for all population group.

Posted Date: 11/28/2012 6:08:12 AM | Location : United States







Related Discussions:- Arguments for uneven distribution of income and wealth, Assignment Help, Ask Question on Arguments for uneven distribution of income and wealth, Get Answer, Expert's Help, Arguments for uneven distribution of income and wealth Discussions

Write discussion on Arguments for uneven distribution of income and wealth
Your posts are moderated
Related Questions
Disadvantages of product differentiation   a) Product differentiation generally reduces the degree of competition in the market.  It does this in two ways:          i.


Importance of Cross Elasticity Knowledge of cross elasticity is necessary when the government wants to impose a tariff on an imported commodity to protect a domestic industry.

The pigou effect, also called the real balance effect, is named after the well known Cambridge school economist Arthur Cecil pigou who had first clearly formulated the relationship


explain critically growth maximisation model of morris ?

Ask quesCase Study Electron Control, Inc., sells voltage regulators to other manufacturers, who then customize and distribute the products to quality assurance labs for their sens

how does knowledge of economics help in maximizing profit in firm

State the difficulties in the measurement of profit.

Explain trend projection method of demand forecasting with illustration.