Describe how the moral hazard associated with welfare benefits can be reduced, and tell what other problems this creates.
What will be an ideal response?
The moral hazard associated with welfare benefits is that welfare benefits reduce the recipient's incentive to work. To reduce this moral hazard, Congress can set a ceiling on welfare benefits that is far below the poverty line (this creates a problem because people totally dependent on welfare benefits will still be extremely poor), and Congress can reduce the rate at which benefits are reduced as income increases (this drives up the cost of the welfare program by making more people eligible for it).
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Data for an economy shows that the unemployment rate is 10%, the participation rate 80 percent, and 200 million people 16 years or older are not in the labor force. How many people are in the labor force in this economy?
A. 200 million B. 800 million C. 80 million D. 1.0 billion
The European Union has prosecuted cases against which American firms for violations of their antitrust laws?
A. Apple and Google B. Kraft and Kellogg C. GM and Ford D. Sirius and XM Radio
Per capita GDP will definitely rise if
A. There is a decrease in the size of the working population. B. The rate of economic growth falls. C. The population falls and GDP does not fall. D. The rate of economic growth is less than the rate of population growth.
?19742015Minimum wage per hour$ 2.00$ 7.25Weekly income from minimum wage$80.00$290.00Cost of a standard basket of goods$47.00$236Number of baskets per week1.701.23
Use Table 2.5 above to answer the question. By what percentage did the federal minimum wage increase between 1974 to 2015?
A. 72.41 percent B. 262.5 percent C. 362.5 percent D. 525.0 percent