Welfare Programs Consume Enormous Amounts of Public Funding During a Time

question 55

Multiple Choice

Welfare programs consume enormous amounts of public funding during a time of recession. Which of the following would lead to the largest reduction in costs of these programs?

• A) consolidate all of the welfare subsidy programs
• B) get the economy growing again, so that fewer people will need the benefit
• C) reduce fraud and waste in current programs
• D) expand benefits of these programs

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Definitions:

Gross Investment

The total amount spent on purchasing or building new fixed assets and on replacing old assets, without deducting for depreciation.

Net Investment

The total amount spent on capital assets (like plant and equipment) minus depreciation, reflecting the actual increase in an entity's productive capacity.

Depreciation

The process of allocating the cost of tangible assets over their useful lives, reflecting the decrease in value of assets due to use, wear and tear, or obsolescence.

Implicit Cost

An indirect, non-payment expense represented by the opportunity cost of utilizing resources in a specific project instead of elsewhere.