What are the main differences between cash transfer payments and payments in-kind? Excluding paternalistic justifications, is one generally preferable to the other? Why or why not?
What will be an ideal response?
In-kind transfer payments come in the form of goods and services, while cash transfer payments are in the form of money. In terms of utility of the recipient, cash transfer payments will always be at least as in-kind payments. In most cases, cash transfer payments will be preferred for two main reasons. Most importantly, individuals know their utility functions best and thus will be able to put the income to the use they value the highest. Of secondary concern is that the administrative costs of cash transfers are usually lower than the administrative costs of in-kind payments. Adding everything up, cash transfers are preferable to in-kind payments.
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A) home equity effect. B) inflation effect. C) wealth effect. D) multiplier effect.
Which of the following is a tool of monetary policy?
A. Buying and selling government bonds B. Making loans to banks C. Setting reserve requirements D. All of the above are tools of monetary policy.
Microeconomics focuses on:
A. total output and the general level of prices. B. issues such as unemployment and inflation. C. the workings of the whole economy or large sectors of it. D. the individual units that make up the whole of the economy.
Refer to the diagram. The profit-maximizing output:
A. is n.
B. is k.
C. is h.
D. cannot be determined from the information given.