When the government attempts to improve equality in an economy the result is often: a) An increase in overall output in the economy, b) Additional government revenue since overall income will increase, c) A reduction in equality, d) A reduction in efficiency

Business Dec 10, 2020

When the government attempts to improve equality in an economy the result is often:

a) An increase in overall output in the economy,

b) Additional government revenue since overall income will increase,

c) A reduction in equality,

d) A reduction in efficiency.

Expert Solution

Answer: D

Whenever the government tries to increase equality, efficiency almost always decreases. This is a classic trade-off in economics since the government could theoretically force equality of incomes but then the incentives to innovate disappear and the economy would stagnate. The economy shrinks as equality because to achieve equality you need to punish those who are adding value and thus they will decide to add less value.

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote