The main problem of a negative income tax system is that it
a. guarantees every household a minimum level of income
b. causes excessive government meddling in people's lives
c. is too complex to administer fairly
d. lowers peoples' work incentives
e. ignores the culture of poverty that produces less income
E
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Aggregate demand increases when
A) foreign incomes fall. B) interest rates rise. C) the exchange rate rises. D) None of the above answers is correct.
The income effect of a price change refers to
A) the change in demand that occurs when both income and price change. B) the change in demand that occurs when consumer income changes. C) the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant. D) the change in the quantity demanded that results from a change in price, making the good more or less expensive relative to other goods, holding everything else constant.
In 2010 the federal government reduced the Social Security tax withholding rate from 12.4 percent (6.2 percent on both the employer and employee) to 8.4 percent (4.2 percent on both the employer and employee) on the wages of all workers. If the tax were redefined such that the entire 12.4 percent was statutorily levied on employers, economic analysis suggests that the actual burden of the tax
would a. remain unchanged. b. shift more heavily toward employers. c. shift more heavily toward employees. d. be different than if the entire 12.4 percent was statutorily imposed on employees.
The demand curve for a monopolist is
A. the industry demand curve. B. the same as the demand curve for a perfectly competitive firm. C. a unitary elastic demand curve. D. a perfectly inelastic demand curve.