Question 1
The answer is option a. This is becasue the most important
question that has to be asked from the employment side is whether
the current project chosen will increase the employment more than
any other projects would have. The second option is just a
manifestation of this first option, but more to do with the wages
side of the employment and not employment itself, more wealth will
be created is a particular project offers more wages than the other
available project options. The third option is also not valid
bacause the project will definitely increase employment, even if it
is by one unit. The question to be asked is whether the project
increase total employment more than any other project. And the last
option is also invalid as it is a question that is already asked by
the first option.
Question 2
The answer is option c. When the government creates jobs, it is
through projects the funding of which has to be done by borrowing
from the people. This will lead to greater interest rates in
future, which will cause crowding out of private investment and
loss of jobs in the private sector, and higher tax rates in the
future to recover the money spent in the project. However, these
are effects that are not seen in the forefront and the main focus
is always on the number of jobs created as a result of the project
which is seen directly.
Question 3
The correct option is option c. This is because for any spike in
government spending, the funds are always borrowed from the publc
in the form of taxes. The private sector output and employment will
undergo a change because massive public sector borrowing leads to
crowding out of the private sector investment and that might create
loss of jobs. The project will definitely not be free as it has to
be funded from the public tax money. Such projects that generate
employment will definitely increase the tax revenue by bringnig
more people into the income tax base but these future tax revenue
collections will not be for funding a project implemented
before.