1. Suppose a welfare program provides a basic grant of $10,000 per year to poor families but reduces the grant by $1 for every $1 of income earned. How would such a program affect a household's incentive to work?
2. How would you define poverty? How would you determine whether a particular family is poor? Is the test you have proposed an absolute or a relative test?

Kindly provide a significant answer for each question. Thank you so much