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.

Question

Quizplus · Accepted Answer

Transfer payments can have a negative impact on the economy by reducing the incentive to work. This is because individuals may rely on the transfer payments instead of seeking employment, resulting in a smaller labor force which shifts the aggregate supply curve to the left.

What Impact Do Transfer Payments Have