As pointed out by the "big tradeoff," government action that redistributes incomes so that everyone has the same income leads to
A) fairness according to the "fair rules" approach.
B) efficient markets.
C) resources being allocated according to a command system.
D) a smaller total output.
E) lower taxes on the rich than on the poor so that the rich do not lose their incentive to work.

Question

Quizplus · Accepted Answer

Redistributing incomes so that everyone has the same income would likely result in a smaller total output because it reduces the incentive for people to work hard and take risks, which are important drivers of economic growth. This is known as the "big tradeoff" because achieving greater income equality through government action necessarily involves sacrificing some level of economic efficiency.

As Pointed Out by the "Big Tradeoff," Government Action That