The allocation of resource refers to how resources are distributed within the economy to suit the macroeconomic objectives. The most likely effect of the high drop out rates of students from low-income households is an ineffective allocation of resources within the economy. According to extract B, 9% of of disadvantaged students do not progress their studies beyond the first year, while less than 5% of students from middle income backgrounds do the same. Almost all jobs within the market expect some form of higher education, with a majority of managerial jobs expecting a 2-1 or higher graded bachelor’s degree as an application requirement. This means that there will be reduced forward social mobility from lower income households as dropping out of higher education significantly reduces your chances of attaining a high paying, high status job. This will negatively impact the economy as this will reduce the redistribution of income, further increasing the income inequality that the elitist UK is known for. As a result, customer confidence in the economy will decrease, lowering MPC, causing a decrease in consumption. This will also decrease AD, resulting in a reduction in economic growth. However, this assumes that the only relevant form of higher education is university level study, but there are many other forms of higher education as well, such as apprenticeships and technical colleges. If students from low income households attend these institutions, they will most likely attain the qualifications needed to progress to a high paying job in future, gradually climbing the corporate ladder as they gain more experience. Therefore, the likelihood that a 9% drop out rate from disadvantage background students will affect the redistribution of resources is reduced.