Question

Read the news​ clip, then answer the following question. Explain the​ supply-side effects of allowing unemployment benefits and the Social Security payroll tax cut to expire. Allowing unemployment benefits to expire​ _______ short-run aggregate supply. Allowing the Social Security payroll tax cut to expire​ _______ short-run aggregate supply. A. ​decreases; decreases B. ​increases; increases C. ​increases; decreases D. ​decreases; increases

Answer 1

Answer: C. Increase; Decreases

Step-by-step explanation:

The news clip was that the congress passed an act which was after the financial crisis of 2008. What they did was basically increase the unemployment benefit and decrease the social security payroll tax by 2%.

Resulting in an increase in the short run aggregate supply due to an increase in unemployment benefits and decrease in short run supply aggregate due to 2% cut in social security payroll tax.