Question

URGENT!!!!

Does Government payment schemes eg. Job Keeper scheme, cause the inflation rate to rise and why?

Answer 1

Generally, government payment schemes cuse inflation rate to rise. This is because government spending on prosperity of people causes price rise. Due to the increased spending, people have more money at their disposal, plus the price rise lowers the value of money. Money has lower purchasing power now. These factors result in inflation.

However, Job keeper scheme -- intorduced in Astralia to enble employers to keep their employees in job -- definitely causes higher money in the hands of those employees compared to absence of the scheme. The economy in this case may be revived from going into recession otherwise. There is more money in circulation now. It achieves twin results: avert recession and give impetus to spending which will eventually cause a rise demand; therefore a rise in prices.