To make child daycare more affordable, government advisors are debating two possible options. Plan A is to give daycare centers a $100 subsidy per month per child. Plan B is to give the parents $100 reduction in taxes per month per child in daycare. Which plan benefits parents more?
a. Plan A because it will increase the supply of childcare and decrease the price.
b. Plan B because the $100 goes directly to the parents.
c. The plans are equivalent in terms of their impact on the price minus subsidy paid by parents.
d. Plan A because the price will fall, while under Plan B the price will rise.
c. The plans are equivalent in terms of their impact on the price minus subsidy paid by parents.
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If a small change in price will lead to an infinite change in the quantity demanded, then the demand curve is: a. horizontal. b. vertical
c. inclined. d. non-linear.
Which of the following would decrease the price level?
a) an increase in the expected price level. b) an increase in the natural rate of unemployment. c) a decrease in taxes. d) a decrease in the money supply.
Which of the following is the most frequently used tool the Fed uses to control the supply of money?
A. the discount rate B. the reserve requirements C. open market operations D. the 30-year home-mortgage interest rate
Deregulation of the airline and trucking industries was followed by the creation of many new firms.
Answer the following statement true (T) or false (F)