An Earned Income Tax Credit will Select one: A. create only an income effect. B. increase...

An Earned Income Tax Credit will

Select one:

A. create only an income effect.

B. increase the wage rate of some low-wage workers to a rate which is above the reservation wage.

C. increase the reservation wage of low-wage workers.

D. create only a substitution effect

Solutions

Expert Solution

The answer is: B). increase the wage rate of some low-wage workers to a rate which is above the reservation wage.

The Earned Income Tax Credit, EITC or EIC, is a benefit for working people with low to moderate-income. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file. EITC reduces the amount of tax you owe and may give you a refund.

Rahul Sunny answered 1 year ago

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