Question:
Suppose that one million unemployed persons in a country are receiving Rs. 6000 per month per person as an unemployment allowance. If the government, instead of paying unemployment allowance, hires all of them at the same amount (Rs. 6000 per month per person) and engages them in digging the pits and filling the same pits. What will be the effect on GDP?
Suppose that one million unemployed persons in a country are receiving Rs. 6000 per month per person as an unemployment allowance. If the government, instead of paying unemployment allowance, hires all of them at the same amount (Rs. 6000 per month per person) and engages them in digging the pits and filling the same pits. What will be the effect on GDP?
Updated On: Oct 1, 2024
- No effect on GDP
- GDP will rise.
- GDP will fall.
- The effect on GDP will be uncertain.
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The Correct Option is B
Solution and Explanation
The correct option is (B): GDP will rise.
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