macro economics?

Question

suppose the government raises unemployment insurance payments in an economy where sticky wages and prices are causing actual output to be below potential output,
a) what are the likely effects on output in the shortrun? How do these effects differ from thoes expected from increased government spending on goods and services such as television broadcasting street cleaning and elderly care?
b)what are the likely longrun effects of the unemployment benefits policy?


PLS I NEED HELP...TNX LOADS..XXXX

Answer 1

Sticky wages and prices, is a macro-economic term I am not familiar with.

A..Actually all the money given out in Unemployent payments will be spent by the recipient as they need the money for everyday expenses, so increased payments to them increases the economy marginally.
Government spending is highly inefficient and the bang for the buck is much less.

Longrun effects of unemployment benefits policy is, As long as it is being paid to people, a certain amount of them will not try to get a job. Once the benefits run out, they get jobs right away. Therefore I feel These benefits are more of a problem to the economy than a cure.

Answer 2

Yeah ec111 but dont live on campus so cant ring that number lol cheers anyway.

oh and a is something to do with output will decrease cause less reason to work as gap between the income you get for not working and working has decreased becasue of sticky wages. Which is opposite to what would happen if an increase in gov spending as more of those goods would be demanded thus causing output to rise.

dont know about b though sorry