What are transfer payments? Give two examples
What will be an ideal response?
Transfer payments refer to payments from the government to certain individual groups, such as the elderly or the unemployed. Unemployment compensation and Medicare, which provides health insurance to Americans above 65 years of age, are two examples of transfer payments.
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Abstraction can be thought of as
A. avoiding reality in order to build theory. B. omitting unimportant details in order to understand complex phenomena. C. relying on absurdity to explain simplicity. D. making complex assumptions when simple facts are sufficient. E. stylizing reality rather than analyzing cause and effect.
Refer to Goods X and Y. If the indifference curves are horizontal, then we can conclude that
Assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions. a. X does not affect the individual’s utility. b. Y does not affect the individual’s utility. c. both X and Y affect the individual’s utility. d. neither good affects the individual’s utility.
Which of the following is part of the economic way of thinking?
a. Opportunity costs will always be incurred when scarce resources are used to produce a good. b. When the cost of an option increases, individuals will be less likely to choose it. c. In addition to their immediate direct effects, economic actions often generate secondary effects that are observable only after the passage of time. d. All of the above are part of the economic way of thinking.
Refer to Table 9-5. The required reserve ratio is 10%. What is the amount of Bolton Bank's required reserves?
A) $30 million B) $70 million C) $100 million D) $300 million