Which Is a Moral Hazard Associated with Transferring Money from High-Income

question 31

Multiple Choice

Which is a moral hazard associated with transferring money from high-income to low-income groups?

• A) The taxation of higher-income individuals may cause them to work less hard.
• B) The taxation of higher-income individuals may cause them to save less.
• C) Individuals may reduce their labor supply to qualify for the means-tested transfers.
• D) The administrative costs of the transfer are high.

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Definitions:

Collection Float

The time between when a check is deposited into a bank and when the amount is credited, affecting cash flow management.

Canada Post

The primary postal operator in Canada, responsible for the collection, sorting, transportation, and delivery of mail and packages across the country and internationally.

Disbursement Float

The time lag between when a payment is issued by a company and when the funds are actually removed from the company’s account.

Chequing Account

A bank account that allows the holder to make deposits, withdrawals, and payments via cheques and is typically used for everyday transactions.