One of the Implications of the Poverty Trap Is That

question 72

Multiple Choice

One of the implications of the poverty trap is that

• A)the effective marginal tax rate can be very high for low-skilled workers,leading to discouraging the labour supply.
• B)the average tax rate can be very high for low-skilled workers,leading to discouraging the labour supply.
• C)the effective marginal tax rate can be low for low-skilled workers,leading to discouraging the labour supply.
• D)the effective marginal tax rate can be very high for high-skilled workers,leading to discouraging the labour supply.

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Definitions:

Market Rate

The current price or interest rate at which goods, services, or financial instruments are traded in a competitive marketplace.

Present Value Tables

Tables that show the present value of cash to be received in the future, discounted at various interest rates.

Par Value

The nominal or face value of a bond, share, or other financial instrument, as stated by the issuer.

Effective Interest Method

An accounting technique for amortizing bond premium or discount over the life of the bond in a way that reflects a constant interest rate.