Preverse incentives
What will be an ideal response?
reward structures that lead to suboptimal outcomes by stimulating counterproductive behavior; for example, welfare—to the extent that it discourages work efforts—is argued to have perverse incentives.
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In the simple Keynesian model which has no taxes and a saving function which is in the form S = -80 + .20Y, a $200 increase in desired investment leads to an increase in equilibrium income of
A) $40. B) $100. C) $400. D) $1000.
Refer to above Table 2-1. What is the level of National Income?
A) 2630 B) 2420 C) 2660 D) 2430
In recent years new automobile factories have opened in California and Ohio and closed in Detroit where the unemployment of automobile workers has increased. This unemployment could be decreased if
A) "moving costs" from Detroit to California and Ohio were reduced. B) information about the new jobs was made available to the unemployed workers at reduced cost. C) workers with the appropriate skills were relatively scarce in Ohio and California. D) all of the above.
Price will rise to eliminate a surplus
a. True b. False Indicate whether the statement is true or false