When the government enacts policies to make the distribution of income more equitable,which of the following occurs?

Question

Quizplus · Accepted Answer

When the government enacts policies to make the distribution of income more equitable, it can lead to a less efficient allocation of resources, a distortion of incentives, and altered behavior. A less efficient allocation of resources may occur because people may not be as motivated to work hard or invest in their businesses if they know that their income will be redistributed. A distortion of incentives may occur because people may try to find ways to avoid paying taxes or may not work as hard if they know they will not be able to keep as much of their income. Finally, altered behavior may occur because people may choose to work in different industries or take different jobs if they know that their income will be redistributed.

When the Government Enacts Policies to Make the Distribution of Income