Redistribution Through the Public Sector Tends to Lower Economic Prosperity

question 46

Multiple Choice

Redistribution through the public sector tends to lower economic prosperity because

• A) it weakens the link between productive activity and the reward derived from it.
• B) it encourages resources to flow into wasteful rent-seeking activities.
• C) the higher tax rates required to finance redistribution result in resources being devoted toward tax avoidance activities.
• D) all of the above are true.

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Definitions:

Financial Statements

Structured reports detailing the financial performance, position, and cash flows of a business, serving as a primary source of financial information.

Long-term Note

A debt instrument that extends for a period beyond one year, representing a borrower's promise to pay back a sum of money to the lender at a specified interest rate.

Collateral

An asset or property that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid.

Coupon Interest Rate

The annual interest rate paid on a bond or fixed-income security, expressed as a percentage of the face value.