A transfer payment is
a. income that is received but not earned
b. income that is earned but not received
c. included in GDP to account for the spending on capital depreciation
d. part of personal disposable income but not personal income
e. always equal to the taxes that the government collects
A
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Suppose that prices are sticky in the short-run. Which of the following best describes the economy's response to a negative demand shock?
A. Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will increase. B. Firms' inventories will decrease, causing them to increase production. Ultimately, real GDP will increase and unemployment will decrease. C. Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will increase and unemployment will increase.
Based on your answer to part (a), is there an economic incentive for the sources to participate in the trading program? Explain briefly.
Suppose two point sources are discharging phosphorus into Wisconsin’sFox River and face the following abatement costs for this pollutant: Point Source 1: TAC1 = 500 + 0.35(A1)2 MAC1 = 0.7A1 Point Source 2: TAC2 = 750 + 1.05(A2)2 MAC2 = 2.1A2, where A1 and A2 represent the abatement of phosphorus effluents in pounds by Source 1 and Source 2, respectively, and TAC and MAC are measured in hundreds of dollars. Assume that the state environmental authority has set the total maximum daily load (TMDL) for the Fox River. To achieve this limit, 40 pounds of phosphorus must be abated across the two point sources. Use this information to answer the following questions.