Which of the following is an example of an explicit income transfer?
A. A Social Security pension paid to a retired factory worker.
B. The paycheck received by a person who missed work last week because of vacation.
C. The check received by a person currently employed by the postal service.
D. A payment to a member of the U.S. Army who has recently been transferred to Germany.
Answer: A
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Which of the following statements is positive?
A. When the Federal Reserve increases the money supply, interest rates decrease. B. Higher taxes are needed to support education. C. Large budget deficits should be avoided. D. A tax cut that benefits low-income households is acceptable.
Which of the following statements is false?
A) Anytime you have to decide which action to take you are facing an economic trade-off. B) Every individual, no matter how rich or poor, is faced with making trade-offs. C) Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale. D) Economics is a social science that studies the trade-offs we are forced to make because of scarcity.
Suppose a Treasury bond will mature in 4 years. If the bond pays a coupon of $425 per year and will make a final par value payment of $10,000 at maturity, what is its price if the relevant market interest rate is 4%?
What will be an ideal response?
Governments have to rely on taxes for financing because
A) they cannot borrow unlimited amounts. B) they usually spend all of the gold reserves. C) gold prices have fallen steadily over the years. D) they are not allowed to sell bonds.