Which of the following statements is true?

A) Taxing the wealthy will lead to a more efficient economy.
B) Taxing the poor will lead to a more equal distribution of income.
C) A basic trade-off exists between the goals of equity and efficiency for a society.
D) The forces of supply and demand will automatically lead to an equitable distribution of income.

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ariii arianaa · Accepted Answer

Final Answer : C, Explanation :  Equity and efficiency are often in conflict with each other. Increasing equity, such as through redistributive taxation, may reduce incentives for productive activities and lead to lower economic growth (less efficiency). Conversely, policies that promote economic growth may exacerbate income inequality (less equity). This trade-off is a fundamental issue in economics and cannot be easily resolved.

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