MPU 3322Sample Question 1a) Income inequality among the nation has always invited heated debate from politicians and the public. Discuss FOUR negative effects of income inequality.(20 marks)b) The eradication of poverty is one of the countrys main agenda in achieving Vision 2020. Describe TWO categories of poverty. (10 marks)c) If you were appointed to be the Finance Minister of the country, what are the TWO ways that you would suggest to reduce income inequality among Malaysians?(20 marks)[Total: 50 marks]

Sample answera) Income inequality affects the rate of growth and investment. A very high inequality will slow down the economic growth. Meanwhile a moderate inequality will encourage growth in economy.Income inequality will create a different style of health and life-span between the rich and the poor. Rich and better educated people will live longer compared to poorer and less educated people. When the socioeconomic status is better, there is a better health protection. High income inequality also threatens a countrys political stability. This is because more people are dissatisfied with their economic status, making it harder to reach political consensus among the people. Political stability affects foreign investment in the country and further affects the efficiency of the government. High inequality will lead to social problems. Examples of social problems include mental illness, crimes, teenage birth and so forth. This is due to the fact that those of lower income will tend to be under pressure as they have to keep up with their daily financial expenses, thus leading them to neglect their family and causing their children to lack attention and love, a main factor which results in the involvement in social problems. b) First, there is poverty incidence of strata. It is determined based on the income obtained to meet the minimum requirements of household equipment. Examples include food, clothing and footwear.Next, there is poverty incidence by ethnicity. The government is adopting as ethnic perspective in national policies. According to this category, poverty incidence is still relatively high among the Malays and other Bumiputeras.c) We need to create more civic awareness among the public concerning the role they can play to close the gap in income inequality. Through the participation of the public in non-governmental organizations, they can assist the government in aiding the poor. With the support from the private companies, NGOs can provide interest free small business loans to poor and hard core poor families. Other programs that they should focus on are programmes in skills training with guaranteed employment, educational assistance and better household schemes.Another step to reduce income inequality is that the government must allocate more funds for childhood education programmes. The government should invest more in early childhood educational programmes. Those programmes greatly improve cognitive skills like arithmetic and reading skills, which are important for getting a high-skilled, good-paying job. Besides this, investments can be made in the development of non-cognitive skills like punctuality and social etiquette that are arguably equally important.