The Following Questions Refer to the information given below.
Suppose the government implements a negative income tax plan to deal with the poverty problem.The negative income tax rate is set at 50%,and the break-even level of income is set at $5,000.
-If the negative income tax rate were reduced from 50% to 40% while the guaranteed income level is held constant,the cost of the plan would
A)Increase
B)Decrease by more than 10%
C)Decrease by 10%
D)Not change
E)Not be able to be determined

Question

Quizplus · Accepted Answer

The cost of the plan would increase because the government would be paying out more money to each recipient.

The Following Questions Refer to the Information Given Below