If Transfer Payments Are Related to Characteristics of Households Like

question 54

Multiple Choice

If transfer payments are related to characteristics of households like income, then an increase in the marginal tax on labour income, _w,:

• A)will have smaller effects in the market clearing model.
• B)will have stronger effects in the market clearing model.
• C)will have the same effects in the market clearing model.
• D)will have no effects in the market clearing model.

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Definitions:

Economic Growth

An increase in the amount of goods and services produced per head of the population over a period of time, typically seen as an indicator of the economic health of a country.

Japanese Yen

The official currency of Japan, represented symbolically as ¥ and known as one of the major currencies traded in the world.

South Korean Won

The official currency of South Korea, symbolized as KRW.

Full Employment

A situation in an economy where all available labor resources are being used in the most efficient way possible, typically characterized by very low unemployment.