“The welfare state is not a mechanism which provides something for nothing; every piece of social insurance must be paid for.” Evaluate and explain. Can you think of any circumstances in which unemployment compensation might provide “something

for nothing?”

What will be an ideal response?


In a full-employment or near full-employment economy, social insurance programs transfer spending power from one group to another, and in that sense are “paid for” by someone. However, in recession with large-scale unemployment, unemployment compensation could be said to provide “something for nothing” in the sense that the insurance funds have accumulated from past contributions, the insured unemployed are eligible to collect benefits which have already been “paid for,” and as a result have a source of income which they will spend on something. This ability to spend and add to aggregate demand is subject to the multiplier effect which should further increase aggregate spending, thus helping to stem the recessionary decline in output and employment. In this sense, unemployment compensation can be said to be providing “something for nothing.”

Economics

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Potential GDP is the level of

A) real GDP that the economy would produce if it was at full employment. B) nominal GDP that the economy would produce if it was at full employment. C) real GDP that the economy would produce if there was no inflation. D) nominal GDP that the economy would produce if there was no inflation. E) real GDP that the economy would produce if there was no unemployment.

Economics

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Exhibit 30-2

?

A. Curve X, because if there is a positive externality, negative external benefits are associated with it: social costs external benefits - private benefits, therefore the marginal social benefit curve must lie below the marginal private benefit curve. B. Curve X, because if there is a positive externality, external benefits are associated with it: social benefits = external benefits + private benefits, therefore the marginal social benefit curve must lie below the marginal private benefit curve. C. Curve Y, because if there is a positive externality, external costs are associated with it: social benefits = external costs + private benefits, therefore the marginal social benefit curve must lie above the marginal private benefit cost curve. D. Curve Y, because if there is a positive externality, external benefits are associated with it: social benefits = external benefits + private benefits, therefore the marginal social benefit curve must lie above the marginal private benefit curve.

Economics

An increase in the cost of an input will result in

A) a leftward shift in the firm's supply curve. B) an upward shift of the firm's marginal cost curve. C) a leftward shift of the market supply curve. D) All of the above.

Economics

Kate's Great Crete (KGC) is a local monopolist of ready-mix concrete. Its annual demand function is Q = 20,000 - 400P, where P is the price, in dollars, of a cubic yard of concrete and Q is the number of cubic yards sold per year. What price does KGC charge per unit when it sells 5,000 cubic years of concrete per year?

A. $12.50 B. $25.00 C. $37.50 D. $50.00

Economics