Which of the Following Limits the Ability of the Current

question 49

Multiple Choice

Which of the following limits the ability of the current system of transfer programs to increase the incomes of the able-bodied poor?

• A) The high implicit marginal tax rates that accompany the current income transfer programs reduce the incentive of the poor to earn.
• B) The transfer programs encourage the poor to marry and form dual-earner families.
• C) The transfer programs tend to increase the wages that employers are required by law to pay for low-skill labor.
• D) The transfer programs reduce the likelihood of single-parent families.

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Definitions:

Efficient Frontier

A concept in modern portfolio theory representing the set of portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Risk Tolerance

The level of fluctuation in the returns on investments that an investor can tolerate.

Risk Aversion

A characteristic or trait describing investors who prefer lower returns with known risks rather than higher returns with unknown risks.

Time Horizons

The length of time over which an investment is expected to be held or a project is expected to be completed.