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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Describe how a push for economic equality might reduce incentives to work and produce output. Then describe how a push for economic inequality might nut have such effects.

To determine

Reduction in incentive to work and produce output due to push for economic equality and its effects.

Explanation

Economic equality limits economic output.

Push for economic equality by guaranteeing an income level may reduce incentive to work and further reduce output.

Redistribution in the economy at large extent by collecting tax at high rate on wealthier persons would ultimately discourage work as well as entrepreneurship.

A push towards economic equality generally requires confining the amount of income people can earn. This is done by charging high tax rates and collecting more taxes from people who earn high income, which further reduces their incentives to work...

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