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Economics IGCSEPDF 95
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A: Growth leads to higher employment and higher incomes across the economy.
An: This results in a massive increase in tax revenue (from income tax and sales tax)
for the government.
An: Simultaneously, government expenditure on unemployment benefits falls, which
significantly improves the budget position (lower deficit or higher surplus).
E: This stronger fiscal position allows the government to increase spending on public
services (e.g., healthcare, infrastructure) without raising taxes or debt, benefiting the
entire electorate.
P1: Arguments For Uneven Distribution
○ K: Growth often primarily benefits owners of capital and skilled labour.
○ An: Profits and returns on assets rise quickly, leading to higher dividends and
wealth for the rich. Unskilled wages may remain stagnant.
○ An: This causes an increase in income inequality, meaning the benefits of
growth are not shared, potentially leading to social problems.
P2: Arguments For Widespread Distribution
○ K: Growth creates more jobs, reducing unemployment across all sectors.
○ An: Increased tax revenue allows the government to increase welfare spending
and improve public services (e.g., better schools/hospitals).
○ An: Even if incomes rise unequally, absolute poverty generally falls, as even the
lowest incomes rise due to job availability.
EVALUATION:
○ The distribution is highly dependent on government policy. If the government
uses progressive taxation and strong welfare systems, it can significantly
mitigate the market tendency for growth to benefit the rich, making the
distribution more equitable.
4.7 Employment and Unemployment
Q6.3: Distribution of Growth Benefits (8 Marks)