Discuss the major programs to combat poverty and evaluate them on the basis of work incentives
One program is education, although this is not a major purpose of schooling. Education spending alone is not sufficient when there are other problems, such as medical or nutritional problems in the home. Further, it is not particularly helpful in lifting adults out of poverty. There are minimal work incentive problems with education.
Temporary Assistance to Needy Families (TANF) provides cash grants to families, with a time limit on lifetime eligibility and strong incentives for recipients to find work. The time limit and work requirements are seen as providing stronger work incentives than AFDC, the program it replaced.
Food stamps are available to poor families. The amount of stamps a family can get and how much they cost depends on a family's income. About 10 percent of all Americans receive food stamps. There are no explicit work incentives with food stamps.
Other programs exist that provide in-kind income and benefits to the poor, such as Medicaid and subsidized public housing. These programs are helpful in aiding the poor. However, since benefits decline as family income increases, there are work disincentives to raise income slightly if it reduces benefits dramatically.
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The tax multiplier is most likely to be larger than the expenditure multiplier when ________
A) monetary policy is at the zero lower bound B) rising inflation causes the real interest rate to decline C) when the change in tax revenue is large relative to the change in government purchases D) the expansionary fiscal policy is expected to be followed by higher taxes
Which of the following is true in the long run? a. The aggregate demand curve determines the level of potential output
b. The long-run aggregate supply curve is horizontal. c. The actual price level and the expected price level are equal. d. Cyclical unemployment is between 5 percent and 6 percent. e. The price level is determined entirely by the long-run aggregate supply curve.
A monopoly firm can sell as much output as it wants at whatever price it sets
a. True b. False Indicate whether the statement is true or false
In Country A, the marginal propensity to consume is ½, and in Country B, it is ¾. What does this tell us about the multipliers for these countries?
a. Country A has a larger multiplier than Country B. b. Country B has a larger multiplier than Country A. c. Both countries have the same multiplier. d. Country B will start with a larger multiplier and end with a smaller one.