Answer to Question #224486 in Macroeconomics for Rumi

Question

What would happen to GDP if the government hired unemployed workers, who had been receiving amount $ TR in unemployment benefits, as government employees and now paid them $ TR to do nothing? Explain.

Answer 1

The GDP would increase since more of the taxes will be gained as the government burden regarding the unemployment benefits would be reduced. The government spendings would have decreased creating more cash to invest in other missions.