Discuss the criticisms leveled against the Aid to Families with Dependent Children program
Aid to Families with Dependent Children (AFDC) was a classic example of an inefficient redistributive program. One major reason was that it provided no incentive for welfare mothers to earn income. Once monthly earnings passed a few hundred dollars, AFDC payments were reduced by $1 for each $1 that the family earned as wages. Consequently, many welfare recipients did not look very hard for work. In addition, critics argued that "the welfare mess" was too bureaucratic, too expensive, and might even be hurting the very people it was designed to help?by, for example, encouraging out-of-wedlock births and fostering a culture of dependence on the state.
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An increase in the quantity of loanable funds demanded occurs when
A) wealth decreases. B) the expected profit rises. C) the real interest rate rises. D) the supply of loanable funds decreases. E) the real interest rate falls.
Why do firms pay dividends? It would appear that they are subject to double taxation, giving more incentive to eliminate them.
What will be an ideal response?
Financial markets serve as the
A) primary source of funds for financial intermediaries. B) means of converting cash into tangible assets. C) transmission mechanism between savers and borrowers. D) economic system's ultimate source of funds.
Refer to Figure 4.1. A shift from S2 to S1 will result from which of the following?
A) an increase in expected future profits B) an increase in net exports C) a decrease in corporate taxes D) an increase in tax credits for savings