When the government redistributes income with taxes and welfare, the economy becomes more efficient.?

Question

true or false?

Answer 1

People who benefit from welfare will very temporarily have spending money, and so spend it. This gives the economy a jolt, but nothing long-term occurs.

Answer 2

Little more complicated than true or false. Based on circumstances.

Answer 3

false, someone has to pay the taxes that pay for the welfare, if everyone is on welfare no one is paying taxes.

Answer 4

It depends on the definition of efficiency you  are using.

If you are trying to maximize sum of everyone utility, then the answer is true, since people  have diminishing marginal utility for goods, so an extra unit of a goods is more valuable to someone poor than someone rich.

If you define efficient as maximizing  production of goods using  standard economic theory then the answer is false

Economist deny  you can measure utility and so  use the standard of maximizing production,  but people's instinct is to use the first.  This difference in point of view lies at the heart of the political debate about economic policy, so it is not a true or false question

Answer 5

False.

In general, the longer a dollar stays in the private sector, the more it grows. Past Keynesian theory has shown that government spending on the military or public works can give a temporary boost and inject revenue feedback. Welfare has a zero or slightly negative feedback. Modern dynamic or macroeconomic historical data has proven the benefits of money in the private sector. See: The Impact of Government Spending on Economic Growth by Daniel J. Mitchell, Ph.D. Backgrounder #1831 http://www.heritage.org/Research/Budget/... March 15, 2005 and How to Measure the Revenue Impact of Changes in Tax Rates by Daniel J. Mitchell, Ph.D. http://www.heritage.org/Research/Taxes/B... Backgrounder #1090 August 9, 1996 and ECONOMICS IN ONE LESSON http://www.mises.org/books/onelesson.pdf