Question

Think about the business cycle: during a recession, unemployment increases; it decreases in an expansionary phase. Explain what happens to TANF, SNAP, and Medicaid programs at each phase of the business cycle (recession, trough, expansion, and peak).

a. Programs like TANF expand during recession and contract during peak
b. SNAP expands during peak and contracts during recession
c. Medicaid expands during expansion and contracts during trough
d. Programs like SNAP expand during recession and contract during peak

Answer 1

During a recession, the enrollment in TANF, SNAP, and Medicaid expands due to increased unemployment, while during an expansion these programs contract as fewer people need assistance. At the business cycle's trough, the enrollment may be highest, whereas at the peak, enrollment typically declines.

Step-by-step explanation:

During different phases of the business cycle, government assistance programs such as Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Medicaid react counter-cyclically to the changes in unemployment and economic activity. During a recession, as unemployment increases, more individuals become eligible for these programs, and therefore, enrollment in TANF, SNAP, and Medicaid tends to expand. Conversely, during the expansionary phase of the business cycle when unemployment decreases, fewer individuals qualify for assistance, leading to a contraction in these programs.

At the trough of the business cycle, where the economy is typically at its lowest point, these programs may experience the highest enrollment. On the other hand, at the peak, where the economy is at its strongest, the enrollment in TANF, SNAP, and Medicaid often decreases due to higher employment levels and better economic conditions for households.