The Following Questions Refer to the Information Given Below

question 31

Multiple Choice

The Following Questions Refer to the information given below.
Suppose the government implements a negative income tax plan to deal with the poverty problem.The negative income tax rate is set at 50%,and the break-even level of income is set at $5,000.
-If the negative income tax rate were reduced from 50% to 40% while the guaranteed income level is held constant,the cost of the plan would

• A)Increase
• B)Decrease by more than 10%
• C)Decrease by 10%
• D)Not change
• E)Not be able to be determined

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Definitions:

Agent Role

The function assumed by an individual or entity authorized to act on behalf of another (the principal), typically in business transactions.

Third Party

An entity that is not directly involved in a transaction or agreement but may be affected by it or play a role in its outcome.

Principal

The primary party involved in a financial transaction or agreement, often referring to the main amount of money borrowed or invested.

Legal Action

A formal proceeding in a court, which involves enforcing or defending a legal right.