Economics - Redistribution of Income
Redistribution of Income
An increase in income directed toward low-income earners rather than
high-income earners is likely to have a very powerful impact on economic
activity. Low-income earners tend to spend most of any extra income they
are given, while high-income earners tend to save the majority of any extra
income they are given. Technically, this means low-income earners have a
high marginal propensity to consume, whereas high-income earners have a
high marginal propensity to save and a low marginal propensity to consume.
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