When the government enacts policies to redistribute income,

Question

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When the government enacts policies to redistribute income, the objective is to enhance equality by taking from the higher-income groups and giving to the lower-income groups. This may lead to a more equal distribution of resources, but it also creates disincentives for the higher-income groups to work harder and innovate, causing a decrease in efficiency. Therefore, the allocation of resources becomes less efficient as a side effect of the policy.

When the Government Enacts Policies to Redistribute Income