When government policies such as the welfare system try to help the neediest members of society, what happens?
A)It increases equity and reduces efficiency.
B)It reduces charitable contributions in an economy.
C)It increases the productivity of the needy in the society.
D)It causes market failure to occur.

Question

Quizplus · Accepted Answer

Government policies aimed at helping the neediest members of society may increase equity by redistributing resources, but this often comes at the cost of reduced efficiency. For example, welfare programs may lead to work disincentives and dependency among recipients, reducing their productivity and creating a drag on the economy overall. In some cases, market failure may occur as a result of government intervention in the form of price controls, subsidies, or other distortions that disrupt the allocation of resources. It is also possible that charitable contributions may decrease if individuals feel that the government is already addressing social needs, although the empirical evidence on this is mixed.

When Government Policies Such as the Welfare System Try to Help