A Government Program Guarantees $18,000 in Income, Even for Those

question 48

Multiple Choice

A government program guarantees $18,000 in income, even for those who do not work at all. If the recipient earns income by working, then the $18,000 benefit is reduced by 50 cents for each
$1 earned. Will this program eliminate the poverty trap?

• A) Yes, enacting such a program will eliminate the poverty trap.
• B) No, enacting such a program may still reduce the incentive to work.
• C) Yes, and enacting such a program will cost the government less money.
• D) Yes, enacting such a program will create adequate incentive to work.

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