If the Government Decided That Each Family Needs a Minimum

question 218

Multiple Choice

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

• A)The government is effectively taxing every dollar earned up to $25,000 at a rate of 100%.
• B)This program would reduce the incentive to work to earn any wage up to $25,000.
• C)If workers are discouraged from working due to this program, they will miss any on-the-job training that would have otherwise occurred, limiting their ability to improve their skills.
• D)All of the above are correct.

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Definitions:

Annuity

An annuity is a financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.

Internal Rate of Return

A financial metric used to evaluate the profitability of potential investments, measuring the rate of return where the net present value of all cash flows from a particular project equals zero.

Present Value Factors

Mathematical factors used in calculating the present value of future cash flows, considering the time value of money.

Cash Outlay

The actual amount of cash spent by a business on expenses, such as purchasing assets, repaying debts, or covering operational costs.