Author Question: Provide a justification for favoring in-kind transfer payments over cash transfer payments. Why ... (Read 142 times)

Zoey63294 · **on:** Jul 1, 2018

Provide a justification for favoring in-kind transfer payments over cash transfer payments. Why might the fungibility of money erode the strength of this justification?

What will be an ideal response?

Question 2

To determine guilt of cartelizing, the antitrust laws use

A) evidence of conspiracy.
B) economic effect.
C) evidence of tacit collusion without meeting.
D) None of the above.

kusterl · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

One justification for favoring in-kind transfer payments over cash transfer payments is that we also care about maximizing the utility of the taxpayer. For paternalistic reasons taxpayers may want to restrict the choices of transfer recipients and thus would like to provide benefits in-kind where taxpayers have more control in seeing that the income is used in a manner deemed appropriate. The fungibility of money weakens this argument because in situations where the value of the in-kind transfer is less than the individual would have bought anyway the in-kind transfer is equivalent to cash for the recipient. Thus, even an in-kind transfer might not constrain recipient behavior in a way consistent with the desires of taxpayers.

Answer to Question 2

A