Utilitarianism suggests that the government should choose policies that maximize the total utility of everyone in society by ?
Correct answer: B. redistributing income from rich to poor because due to the diminishing marginal utility of income, taking a pound from the rich reduces their utility by less than the gain in utility generated by giving a pound to the poor
- A. redistributing income from rich to poor because this is what the members of society would choose to do if they were behind a veil of ignorance
- B. redistributing income from rich to poor because due to the diminishing marginal utility of income, taking a pound from the rich reduces their utility by less than the gain in utility generated by giving a pound to the poor
- C. allowing each individual to maximize their own utility without interference from the government
- D. redistributing income from rich to poor because this would maximize the well-being of the worst-off person in society
Explanation
Utilitarianism uses total utility as its objective, and diminishing marginal utility means an extra pound usually benefits a poor person more than it harms a rich person. This gives a utility-based argument for redistribution from rich to poor.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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