Ch 1 (Q).doc - Chapter 1 Problem Set(five questions...

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Chapter 1 Problem Set (five questions) One point questions: 1. A 1996 bill reformi ng the federal govern ment antipov erty progra ms put a two year limit on many welfare recipie nts’ benefit s. Previo us to the change , there was no limit. a. How did this change affect the incentives for working? b. How might this change represent a trade-off between equity (“fairness”) and efficiency? 2. The Social Security system provides income for people over 67. Recipients of Social Security benefits can continue to work in order to earn more income. However, the amount he or she receives in Social Security benefits may be subject to income tax depending on how much the individual earns from working. a. How does the provision of Social Security affect people’s incentive to save while working before reaching the age of 67 (in other words, how would knowing you are going to get benefits versus knowing you are NOT going to get benefits affect your incentive to save while working before the age of 67)?
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  • Fall '16
  • yanen chen
  • Economics, Federal government of the United States

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