If the Government Redistributes Income from the Rich to the Poor

question 66

Multiple Choice

If the government redistributes income from the rich to the poor:

• A) there is no change to efficiency because rich people can afford it
• B) everyone gains when the poor have more money
• C) people respond by working harder
• D) people tend to work less and this causes losses in output

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Definitions:

Economic Growth

An upswing in economic output regarding goods and services over a given time interval, typically evaluated using the Gross Domestic Product.

Improving Technology

The process of developing and applying new and better techniques, tools, and machines to increase efficiency, productivity, and quality in production or services.

Capital

Wealth in the form of money or other assets owned by a person or organization or available for purposes such as starting a company or investing.

Factor Suitability

Factor suitability refers to the degree to which a country's resources—such as labor, land, and capital—are appropriate for producing certain goods or services efficiently.