Which of the following is true?
A) The close link between personal income and provision of productive resources to others provides individuals with a strong incentive to develop skills.
B) Income can be taxed away from some and transferred to others without altering the incentive to engage in productive activities.
C) Holding technology constant, the size of the economic pie available for distribution among economic participants is fixed.
D) In a democratic setting, the government's tax and spending policies can redistribute income without influencing the size of the economic pie.
E) Both b and d are correct.

Question

Quizplus · Accepted Answer

Option A indicates that personal income is linked to the provision of productive resources, therefore individuals are incentivized to develop skills to earn more income. This aligns with economic principles such as the relationship between supply and demand in labor markets. Options B and D are incorrect as taxation and government policies can impact the size of the economic pie and individual incentives. option C is incorrect as technological advancements and innovations can lead to an increase in the size of the economic pie.

Which of the Following Is True