How Do the High Implicit Marginal Tax Rates That Often

question 35

Multiple Choice

How do the high implicit marginal tax rates that often occur when transfer payments are inversely linked to earnings affect the incentive of poor people to work and earn?

• A) A poor person's incentive to earn is increased.
• B) A poor person's incentive to earn is reduced.
• C) The incentive of the poor to earn is unaffected.
• D) The incentive of the poor to earn reported income is increased, but the incentive to earn unreported income is reduced.

---

Definitions:

Amygdala

A region of the brain involved in experiencing emotions, notably fear and pleasure, and in forming emotional memories.

Neuroplasticity

The ability within the brain to constantly change both the structure and function of many cells in response to experience or trauma.

Reflex Arc

The connection of the afferent neurons to the interneurons to the efferent neurons, resulting in a reflex action.

Somatic Nervous System

A part of the peripheral nervous system responsible for carrying motor and sensory information both to and from the central nervous system.