econ homework questions

Chapter 1 and 1A Homework (SHOW YOUR WORK)

One point questions:

1. The Social Security system provides income for people over 65. If a recipient of Social Security decides to work to earn more income, the amount he or she receives in Social Security benefits may be reduced because the recipient will have to pay income taxes on the social security benefits if the additional income exceeds a certain threshold.

a. How does the fact that you know you are eligible for Social Security when you retire affect people’s incentive to save while working?

b. How does the reduction in net benefits (because of having to pay income taxes) associated with higher earnings affect people’s incentive to work past age 65?

2. A 1996 bill reforming the federal government’s antipoverty programs limited many welfare recipients to only two years of benefits.

a. How does this change affect the incentives for working?

b. How might this change represent a trade-off between equity and efficiency?

3. Which of the following statements is positive, which is normative?

a. The U.S. government should cut its imports from China.

b. China is the United States’ largest trading partner.

c. If the price of antiretroviral drugs increases, HIV/AIDS sufferers will decrease their consumption of the drug.

d. The poor pay too much for housing.

Two point question

4 & 5. If you were to plot the two sets of data below, what would be the slopes of the two lines?

X	Y
1	4
2	8
3	12
4	16
5	20
X	Y
2	4
4	8
6	12
8	16
10	20