Question

1. According to the media release by Phillip Lowe, "a gradual further increase in underlying inflation is expected as the economy strength." All else constant, inflation arises when:

A.  The expenditure plans of agents exceed the supply of output by firms
B.  The earning plans of agents fall short of what they earn in the economy
C.  The currency appreciates in the foreign exchange market
D.  The government increases unemployment benefits

2. The Australian government is concerned about inter-generational equity problems. Key problems arise from a larger number of older retired people being supported by a smaller workforce of young people, and from ever increasing budget deficits to be paid for by younger people. Encouraging older people to stay in the labour force rather than retire would help fix this problem.

A. True

B. False

Answer 1

1) D.  The government increases unemployment benefits

Unemployment benefit programs play an essential role in the economy by protecting workers' incomes after layoffs, improving their long-run labor market productivity, and stimulating the economy during recessions. Governments need to guard against benefits that are too generous, which can discourage job searching.

2) The answer is True: but only temporarily e.g. They can be asked to work but for less hors. Similarly. They can be encouraged to work voluntarily.