The Economic Analysis of Extending the Duration of Unemployment Benefits

question 67

Multiple Choice

The economic analysis of extending the duration of unemployment benefits to 99 weeks involves both positive and normative analysis.Consider the following consequences of extending the duration of unemployment benefits:
a. Extending the duration of unemployment benefits to 99 weeks will create less incentive for some unemployed workers to seek employment.
b) Extending the duration of unemployment benefits to 99 weeks will increase the total amount of government expenditure on unemployment benefits.
c) The benefits received by those collecting unemployment benefits should be valued more highly than the increase in government expenditure needed to pay the benefits.
d) By extending the duration of unemployment benefits to 99 weeks,the unemployed will have more time to acquire new skills before reentering the workforce.
Which of the consequences above are positive statements and which are normative statements?

• A) a and b are positive statements; c and d are normative statements.
• B) Only b is a positive statement; a, c, and d are normative statements.
• C) a and d are positive statements; b and c are normative statements.
• D) a, b, and d, are positive statements; only c is a normative statement.

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Definitions:

Psychological Contract

The unwritten set of expectations between an employer and employee regarding mutual obligations.

Job Security

The likelihood of an individual to retain their job without the risk of becoming unemployed.

Social Security

A government program that provides financial assistance to individuals during retirement, disability, or in the event of death, funded through payroll taxes.

Customer Service

The assistance and support provided by a company to those people who buy or use its products or services.