The equality-efficiency trade-off suggests that:

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The equality-efficiency trade-off suggests that transferring income from the rich to the poor can result in inefficiencies, as the rich may have a higher marginal propensity to save and invest, while the poor may have a higher marginal propensity to consume. Therefore, the optimal level of income redistribution is a trade-off between promoting equality (through income transfers) and promoting efficiency (through incentives to work and invest).

The Equality-Efficiency Trade-Off Suggests That