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Author Question: Explain why distributing 500 worth of food stamps to someone is not the same thing economically ... (Read 41 times)

jhjkgdfhk

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on: Jun 29, 2018
Explain why distributing 500 worth of food stamps to someone is not the same thing economically speaking as giving them 500 in cash? Why might the cash option make the poor better off than food stamps?
 
  What will be an ideal response?

Question 2

How does an increase in the budget deficit affect the demand for dollars and the supply of dollars on the foreign exchange market?
 
  A) The demand for dollars rises, and the supply of dollars rises.
  B) The demand for dollars rises, and the supply of dollars falls.
  C) The demand for dollars falls, and the supply of dollars rises.
  D) The demand for dollars falls, and the supply of dollars falls.


bd5255

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Food stamps can only be used for purchasing for food. Giving someone cash would allow them to spend money on other things as well. It may very well be that there are other expenditure items in the budget of some of the poor that have a higher priority and utility than food like heating oil, electricity, clothes or insurance. Cash allows them to spend more money on these items.

Answer to Question 2

B


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