Suppose a government enacts policies that redistribute income. Which of the following statements is true? (i) incentives will be distorted
(ii) people are likely to alter their market behaviour
(iii) a fair distribution of income is ensured

Question

Quizplus · Accepted Answer

When income is redistributed, people's incentives to work and earn income are distorted because they will receive less benefits from working harder or earning more. This can lead to changes in market behavior as people adjust their work effort or seek alternative sources of income. However, redistributing income does not necessarily ensure a fair distribution of income, as the definition of fairness is subjective and depends on individual opinions and values.

Suppose a Government Enacts Policies That Redistribute Income