Which of the following could reduce economic efficiency?
A)laws that encourage lawsuits
B)policies that redistribute income
C)policies that impose significant restrictions on international trade
D)All of the above are correct

Question

Quizplus · Accepted Answer

Laws that encourage lawsuits can increase the costs of doing business, reducing efficiency. Policies that redistribute income can have a similar effect by reducing incentives to work, save and invest. And policies that impose significant restrictions on international trade can limit access to foreign markets, which can decrease efficiency by reducing competition and limiting the ability of businesses to access the best inputs and markets for their goods and services. All of these factors, therefore, could possibly reduce economic efficiency.

Which of the Following Could Reduce Economic Efficiency