Current anti-poverty programs discourage work because ?
Correct answer: A. benefits are reduced at such a high rate when recipients earn more income that there is little or no incentive to work once one is receiving benefits.
- A. benefits are reduced at such a high rate when recipients earn more income that there is little or no incentive to work once one is receiving benefits.
- B. in order to be eligible for benefits a recipient cannot have a job
- C. they make recipients more comfortable than most middle-class citizens.
- D. anti-poverty programs attract naturally lazy people to begin with.
Explanation
Benefits that are withdrawn rapidly as earnings rise create a high effective marginal tax rate. The recipient may keep little or none of each additional unit of income, weakening the incentive to work.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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