Unformatted text preview: uals from whom income is taken – because they have high income – have
less incentive to exert effort to create that income.
B. the individuals to whom income is given – because they have low income – have less
incentive to exert effort to create their own income.
C. Both A and B.
D. None of the above.
8. There is likely no trade-off between redistribution and wealth creation at extreme
levels of inequality because
A. poverty can motivate people to exert more effort.
B. poverty can cause poor self-esteem, crime and insurrection, all of which undermine
C. very high levels of wealth encourage laziness.
D. All of the above.
9. Consider Figure 7-1. “Economic theory implies that society should choose point “A”
on this curve”. True or false?
B. False. 36 WEALTH CREATION A WEALTH REDISTRIBUTION Figure 8.1 10. A cost-effective policy redistribution policy
A. is one that has no impact on wealth-creation incentives.
B. is one that achieves a target level of redistribution with the lowest poss...
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This document was uploaded on 03/03/2014.
- Spring '14