Final answer:
The equity-efficiency trade-off points to a potential reduction in overall economic output when actions are taken to make economic outcomes fairer. This trade-off is a balance between improving equity and maintaining, or potentially decreasing, economic efficiency.
Step-by-step explanation:
The equity-efficiency trade-off is a concept describing the balance between the fairness of economic outcomes and the overall efficiency of the economy. In this context, the correct choice that describes the equity-efficiency trade-off is D. actions intended to make economic outcomes fairer can cause efficiency to decrease. This means that as a society or government makes efforts to redistribute income or wealth to achieve a more equal society, it may introduce inefficiencies in the market that reduce the total economic output.
Some common examples are taxes or regulations that aim to make wealth distribution more equitable but may also discourage investment or reduce incentives for production, leading to a potential decrease in overall economic productivity. In some cases, it is possible to improve equality with little impact on productivity, but beyond a certain point, aggressive equality measures can lead to reduced efficiency.