Suppose a Working Mother Is Currently Ineligible for Any Government

question 51

Multiple Choice

Suppose a working mother is currently ineligible for any government assistance.If she were then to become eligible for an income maintenance program that incorporates both a basic benefit and a positive benefit-reduction rate:

• A)both the income and substitution effect will cause her to increase her work effort
• B)both the income and substitution effect will cause her to decrease her work effort
• C)her work effort will increase if the substitution effect is stronger than the income effect
• D)her work effort will decrease if the substitution effect is stronger than the income effect

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Definitions:

Note Payable

A written promissory note where the borrower agrees to pay back a specified sum of money to the lender on a certain date or on demand.