Welfare Recipients Are Sometimes Faced with a Withdrawal of Welfare

question 33

Multiple Choice

Welfare recipients are sometimes faced with a withdrawal of welfare benefits and an increase in income tax as their earned income rises.This creates a problem because

• A)it is administratively difficult to track these individuals.
• B)of the incentives for firms to lay off workers more frequently for short periods.
• C)firms become unwilling to hire people that are currently unemployed.
• D)of the powerful disincentives to work for low- income individuals.
• E)of the incentives for workers to shirk and/or retire early.

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Definitions:

Sales Tax

A tax imposed by a government on the sale of goods and services, usually calculated as a percentage of the retail price.

Ordinary Repair

Expenditures to maintain the operating efficiency and expected productive life of an asset, treated as an expense.

Capitalization

The total value of all a company's outstanding shares of stock, calculated by multiplying the share price by the total number of shares.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.