Government Programs That Take Money from High-Income People and Give

question 324

Multiple Choice

Government programs that take money from high-income people and give it to low-income people typically

• A)improve economic efficiency by reducing poverty.
• B)reduce economic efficiency because they distort incentives.
• C)have no effect on economic efficiency because they both reduce poverty and distort incentives.
• D)sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency.

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Definitions:

Negotiable Instrument

A financial document, such as a check or promissory note, that contains a promise to pay a specific amount of money to the bearer or assignee, which can be transferred by endorsement or delivery.

Promissory Note

A financial instrument containing a written promise by one party to pay a certain sum of money to another party under specified conditions.

Revolving Line of Credit

A flexible loan arrangement which allows a borrower to use, repay, and re-borrow funds up to a certain credit limit.

Negotiability

The feature of a financial instrument that allows it to be transferred or assigned freely from one party to another.