What are the strengths and weaknesses of the negative income tax (NIT) as an alternative to traditional welfare programs?
What will be an ideal response?
The tax would increase the incentive to earn since one’s income would always rise if earnings increased. Traditional welfare programs effectively tax away very high percentages of additional earnings by reducing payments substantially. The down side of the NIT is that incomes considerably above the poverty level would still receive money, so that the overall program could be costly.
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The Buda Agri Corporation is the sole employer in rural Hungary. In the labor market, Buda Agri is a
A) monopolistic competitor. B) perfect competitor. C) monopsony. D) monopoly.
When the Federal Reserve ________
A) drains liquidity, the federal funds rate falls B) drains liquidity, real interest rates fall C) provides more liquidity, the federal funds rate falls D) all of the above E) none of the above