Describe the advantages that a negative income tax has over other programs designed to aid the poor
First, a negative income tax is less costly to administer than other poverty-fighting programs because it can
be administered routinely by the IRS. Second, it avoids the stigma of handouts. Finally, it actually creates
an incentive to work because the more income earned, the higher is the household's after-tax income.
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The natural rate of unemployment is equal to the unemployment rate when there is only:
A. structural and frictional unemployment. B. frictional unemployment. C. cyclical unemployment. D. structural and cyclical unemployment.
As the Federal Reserve ________ bonds, interest rates rise and the price of bonds ________
A) sells; falls B) buys; rises C) sells; rises D) buys; falls
Present value:
A. is how much an amount of money obtained in the future is worth today. B. does not account for inflation. C. is always greater than the future value of money. D. All of these statements are true.
Suppose that disposable income is $1,000 consumption is $700 and the MPC is 0.6. If the disposable income increases by $100, consumption and savings will equal which of the following?
A) $420/$280 B) $600/$400 C) $660/$320 D) $660/$440 E) $760/$340