O Levels Economics (2281)•2281/13/O/N/24

Explanation
Progressive taxation redistributes income while public health spending boosts standards
Steps:
- Progressive income tax increases rates on higher earners, transferring wealth from rich to poor via redistribution.
- Higher hospital spending provides accessible healthcare, a public good that benefits all, especially lower-income groups.
- This reduces income inequality, making distribution more even.
- Improved healthcare raises overall living standards through better health outcomes.
Why D is correct:
- Progressive taxation, by definition, makes income distribution more even by taxing higher incomes at higher rates, while hospital spending rises living standards via enhanced public welfare.
Why the others are wrong:
- A: Tax policy makes distribution more even, not less; living standards rise, not fall.
- B: Distribution becomes more even, not less, despite rising standards.
- C: Living standards rise with better healthcare, not fall.
Final answer: D
Topic: Fiscal policy
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