When policymakers make policies that change the costs and benefits that people face, what can the policymakers do?

Question

Quizplus · Accepted Answer

By changing the costs and benefits that people face, policymakers can alter the behavior of individuals and groups in society. For example, policies such as taxes, subsidies, or regulations aim to incentivize certain behaviors and make others less desirable or even illegal. Therefore, policymakers can influence the decision-making of people and organizations by manipulating their incentives. The other choices, such as making people ignore incentives, creating inflation, or reducing government revenue, are not desirable outcomes of policymaking and do not reflect the intended consequences of changing incentives.

When Policymakers Make Policies That Change the Costs and Benefits