As a Result of the Trade-Off Between Income Equality and Incentives

question 31

Multiple Choice

As a result of the trade-off between income equality and incentives to work,an optimal redistribution policy

• A) can never be funded through taxes on labor income.
• B) must always achieve a full egalitarian society.
• C) only benefits the middle class.
• D) always falls short of a fully egalitarian society.

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Definitions:

Lease

A contractual agreement by which one party conveys property, land, services, or goods to another for a specified time, usually in return for a periodic payment.

Escrow Agent

A neutral third party who holds assets or documents in trust until certain conditions are met and then facilitates the transfer of these assets or completion of legal obligations.

Security Interest

A legal claim or lien on collateral that has been offered to secure a loan, ensuring the lender can repossess or take ownership of the collateral if the borrower defaults.

Mortgage

A legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.