Which Statement About the Estimated Effects of the Earned Income

question 4

Multiple Choice

Which statement about the estimated effects of the Earned Income Tax Credit (EITC) on labor supply is TRUE?

• A) The 1986 expansion of the EITC did not increase the labor market participation of single mothers.
• B) The 1986 expansion of the EITC did not affect the number of hours worked by those already in the labor force.
• C) The 1986 expansion of the EITC reduced the number of hours worked by those in the labor force.
• D) Researchers were not able to study the effects of the 1986 expansion of the EITC.

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Definitions:

Tax Bracket

Categories that determine the rate at which income is taxed based on income levels.

403b Plan

A retirement savings plan available to certain employees of public schools and nonprofits, allowing them to save a portion of their salary in a tax-deferred account.

Bequest

The act of giving assets to beneficiaries through a will or estate plan.

Planning Horizon

The period over which forecasts or plans are made and future cash flows are projected, influencing decision-making processes.