MPU 3322

Sample Question 1
a) 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 answer
a) 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 highskilled, 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.