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:

Mortgage Trusts

Investment vehicles that pool mortgage loans and issue shares to investors, who receive dividends from the interest and principal payments made by borrowers.

REITs

Real Estate Investment Trusts, companies that own, operate, or finance income-generating real estate, allowing investors to invest in large-scale real estate properties.

Growth Fund

A type of mutual fund or investment fund that focuses on investing in growth stocks or companies expected to grow at an above-average rate compared to their industry or the market.

Net Asset Value

The total value of a fund's assets minus its liabilities, often used in the context of mutual funds to describe the per share/unit value of the fund.