Government policies resulting in reduced efficiency include
I. the welfare system
Ii. unemployment insurance
Iii. progressive income tax

Question

Quizplus · Accepted Answer

The welfare system and unemployment insurance provide financial assistance to those who are not working or earning income, which can create disincentives for individuals to seek employment or improve their skills to earn higher wages. This reduces efficiency in the labor market. The progressive income tax also creates disincentives for individuals to work harder or earn more income as they face higher tax rates. Thus, all three policies can reduce efficiency in the economy.

Government Policies Resulting in Reduced Efficiency Include