Compared with a low benefit reduction rate, a relatively high benefit reduction rate in a cash assistance program:
A. reduces the incentive to work.
B. increases the incentive to work.
C. does not affect the incentive to work.
D. will reduce the incentive to work through the substitution effect but will increase the incentive to work through the income effect.
Answer: A
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The Board of Governors of the Federal Reserve is part of a larger policy-making group called the
A) Senate Banking Committee. B) Federal Deposit Insurance Corporation. C) American Banking Association. D) Federal Open Market Committee.
Who loses surplus when consumers in a market are forced to pay a Pigouvian tax for a negative externality?
A. Producers B. Consumers C. Others affected by the externality D. Both producers and consumers lose surplus when negative externalities are internalized.
The rationale for ability-to-pay taxation and the contention that those with large incomes should pay more taxes both absolutely and relatively is that:
A. high-income receivers are generally in a better position to shift taxes than are low-income receivers. B. the transfer system is regressive and it is therefore essential to have an offsetting progressive tax structure. C. rational consumers spend their first dollars of income on the most urgently desired goods and successive dollars on less essential goods. D. taxes should be paid for financing public goods in direct proportion to the satisfaction an individual derives from those goods.
Which of the following is the best example of a quota?
A) a limit on the quantity of residential air conditioners that can be imported from a foreign country B) a $150 fee imposed on all imported residential air conditioners C) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment D) a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers