The economic consequences of such policies
Policies that redistribute income and reduce poverty create trade-offs. They can improve fairness, but they may also affect people's incentives to work, save, or invest.
Real World
When France briefly trialled a 75% top income tax rate under President Hollande (2012–14), high-earning footballers and business executives — including Gérard Depardieu — relocated abroad, reducing the tax base and demonstrating the Laffer Curve effect.
Exam Focus
Always address trade-offs: state the intended effect of a policy, then the unintended consequence, for strong evaluation marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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