A Government Program Guarantees $18,000 in Income, Even for Those

Multiple Choice

A government program guarantees $18,000 in income, even for those who do not work at all. If the recipient earns income by working, then the $18,000 benefit is reduced by 50 cents for each
$1 earned. Will this program eliminate the poverty trap?

A) Yes, enacting such a program will eliminate the poverty trap.
B) No, enacting such a program may still reduce the incentive to work.
C) Yes, and enacting such a program will cost the government less money.
D) Yes, enacting such a program will create adequate incentive to work.