For each of the following, state whether the policy would work according to the current income theory and the permanent income theory and explain why in detail. A permanent increase of $500 in Social Security payments to all recipients. An increase in the duration of state unemployment benefits [from 26 weeks to 52 weeks] plus a special additional Federal benefit of $300 per week. Forgiveness of all student debt in excess of $15,000 currently outstanding Forgiveness of all student debt currently outstanding and a rebate of interest and principle for all previously paid student debt going back to 1970 to be paid out in a lump sum but not to exceed $100,000 per student. Forgiveness of all student debt currently outstanding and a rebate of interest and principle for all previously paid student debt going back to 1970 to be paid out in monthly installments over ten years but not to exceed $100,000 per studen

For each of the following, state whether the policy would work according to the current income theory and the permanent income theory and explain why in detail. A permanent increase of $500 in Social Security payments to all recipients. An increase in the duration of state unemployment benefits [from 26 weeks to 52 weeks] plus a special additional Federal benefit of $300 per week. Forgiveness of all student debt in excess of $15,000 currently outstanding Forgiveness of all student debt currently outstanding and a rebate of interest and principle for all previously paid student debt going back to 1970 to be paid out in a lump sum but not to exceed $100,000 per student. Forgiveness of all student debt currently outstanding and a rebate of interest and principle for all previously paid student debt going back to 1970 to be paid out in monthly installments over ten years but not to exceed $100,000 per studen

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter15: Fiscal Policy

Section: Chapter Questions

Problem 10SQP

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1/2 of the population is unemployed with $500 in income; the other 1/2 are employed and earn $50,000 each individual has the utility function: U=4x(1/2) where x=individual's income Proposal 1) government taxes everyone with income at a flat rate of 10%. From the tax revenue, the government will refund the same amount to each person; regardless of their income Proposal 2) government taxes everyone at a flat rate of 10%. It will refund the same amount to each person according to the percentage of taxes paid. Question: compare the proposals under the utilitarian and Rawlsian social welfare functions. How do these proposals rank under each social welfare function? (all calculations can be done on a per-capita basis).
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Explain how investment tax credit and employment tax credit can be used to address unemployment