Use the following to answer questions :
Figure 17-3
-The substitution of the negative income tax for current income redistribution programs would (in terms of Figure 17-3)cause a:

Question

Use the following to answer questions :
Figure 17-3 
-The substitution of the negative income tax for current income redistribution programs would (in terms of Figure 17-3)cause a:

Quizplus · Accepted Answer

The substitution of the negative income tax for current income redistribution programs would lead to a shift in the curve of effective transfer from ABZ to ACX. This is because the negative income tax would provide a guaranteed income to those below the poverty line and reduce the amount of transfers needed from the government. This would lead to a decrease in the slope of the effective transfer curve, shifting it to the left towards point C.

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