When policymakers make policies that change the costs and benefits that people face, what is the result for society?
A) people's behaviours are altered
B) people ignore incentives
C) inflation occurs
D) government revenue is reduced

Question

Quizplus · Accepted Answer

When policymakers change the costs and benefits that people face, they are altering the incentives that individuals have to undertake certain actions. This, in turn, can lead to changes in people's behaviors. For example, if the government increases taxes on cigarettes, this may incentivize some individuals to quit smoking. Alternatively, if the government offers tax breaks for investing in renewable energy, this may incentivize some individuals to invest in this sector.  So, the correct answer is A.

When Policymakers Make Policies That Change the Costs and Benefits