An increase in subsidies and other government spending during a recession is likely to result in
A) an increase in rent-seeking activity.
B) an increase in productive projects and a reduction in unproductive projects.
C) a decrease in the level of future taxes.
D) greater reliance on profits and losses in the allocation of resources.

Question

Quizplus · Accepted Answer

Increased government spending and subsidies can lead to more rent-seeking as individuals and firms try to capture these funds, rather than focusing on productive activities.

An Increase in Subsidies and Other Government Spending During a Recession