Consider an income guarantee program with an income guarantee of $5,000 and a benefit reduction rate of 40%. A person can work up to 2,000 hours per year at $10 per hour.   a. Draw the person’s budget constraint with the income guarantee.   b. Suppose that the income guarantee rises to $7,500 but with a 60% reduction rate. Draw the new budget constraint   c. Which of these two income guarantee programs is more likely to discourage work? Explain.

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