What impact do transfer payments have?
A)They reduce the incentive to work and shift AS to the right.
B)They reduce the incentive to work and shift AS to the left.
C)They increase the incentive to work and shift AS to the right.
D)They increase the incentive to work and shift AS to the left.

Question

Quizplus · Accepted Answer

Transfer payments are payments made by the government to individuals or families in need. These payments can include welfare, unemployment benefits, and social security. These payments can reduce the incentive to work because individuals may choose to rely on these payments instead of working. This can shift the aggregate supply (AS) curve to the left because there are fewer available workers in the labor market.

What Impact Do Transfer Payments Have