Initial Contribution

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Initial Contribution

1. The current distribution of Income is a benefit to our economy and to our society. Distribution of income refers to the allocation of the country’s GDP amongst its population (Atkinson and Franc?ois, 24). The current income distribution’s primary benefit is that it ensures the maximization and efficiency of resource allocation in the country. The present methods of income distribution in the country have ensured equality in terms of the resources allotted to various places in the world. Impartiality in resource allocations is a benefit because it enables the country to have equal levels of development. Equal development ensures that the country experiences steady growth levels in the economy. If there is unequal development, the economy will be affected as well as the GDP of the country.

2. The current distribution of income is a cost to our economy and our society. The primary reason that supports this notion is that it limits the potential of some states or industrial centers in the country. This is because the current distribution of income ensures the equal allocation of resources in the country. The limitation of the potential of some states for instance occurs because they may have the ability to produce a lot more than that, which may have been allocated to them. If the current method was to be reviewed, such states will increase their production and this will have a positive impact on the economy of the country and the GDP. In some cases, the states given some resources may not be able to utilize them to obtain their maximum benefits and this will affect the levels of economic growth the country may want to achieve.

3. The federal government should make a choice to influence the distribution of income through tax policy and social programs. Their influence in the distribution of income will be very beneficial to the economic growth of the country. Tax policy is a method the government uses to collect and levy tax. This method uses different tariffs to impose taxes in different places based on their level of development. The government may use this to influence the level of distribution of income to the various states in the country. The different tariffs imposed on the various states may be used to help decide on the amount of resources the state in question should be allocated. Social programs refer to the various subsidies that have been put in place by the government in order to improve the standards of living of its citizens. The use of social programs may be important in the allotment of the natural resources. The goal of the government in the allocation of the natural resources is to ensure that the distribution of income is based on a nearly equal basis. This is because not all the states in the country have the same abilities to utilize the resources. Some states may be more productive than others may. The possibility of the country having equal resource allocation is rather inappropriate (Schatan and Eugenio, 45).

4. In my view, the primary uncertainty associated with the interference of the government is the inequality in the distribution of the country. This inequality will bring about an economic risk especially in the computing of the GDP of the country. Government interference especially in resource allocation will result in some states getting more resources than their counterparts do. This will result in some states attaining a more developed economy. The greatest risk that this will cause is in the computation of the GDP of the country (N.A., 59). The problem will arise because of the disparity of the states in the country.

Works Cited

Atkinson, A B, and Franc?ois Bourguignon. Handbook of Income Distribution. Amsterdam: Elsevier, 2000. Print.

N.A. Handbook of Monetary Economics. Amsterdam: Elsevier, 2010. Print

Schatan, Claudia, and Eugenio Rivera. Competition Policies in Emerging Economies: Lessons and Challenges from Central America and Mexico. New York: Springer, 2008. Print.