Government Intervention to Reduce Income Inequality Might Reduce Growth Rates

question 33

Multiple Choice

Government intervention to reduce income inequality might reduce growth rates because of rent-seeking behavior.This means that

• A) landlords might raise rental rates on housing in order to pay the higher taxes that go with government wealth redistribution programs.
• B) groups who are not among the neediest might put pressure on government officials to obtain transfers of wealth.
• C) people who are not home owners, but reside in rental housing, may become unmotivated and work less, reducing payments to landlords and slowing real estate markets.
• D) as a larger fraction of the population falls below the poverty line, or near it, they are pushed out of home ownership and into rental housing. This means they cannot build equity, slowing economic growth overall.

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