Question

1. What is happening in the economic loop if the public sector raises the payouts of child benefit? Explain the courses of events that occur as far as you can by telling how all actors are affected by these new events.

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Answer 1

Following happen in the economic loop if the public sector raises the payouts of child benefit:

• Improvement in living conditions of children : increase in child benefits by government we lead to improvement in living conditions of children by providing them more health care aids etc.
• Increase in the social welfare: if government increases expenditure on child benefit it leads to upliftment in their conditions by improving their health, education etc. it leads to increase in welfare of society.
• Increase in public expenditure: the rise in payout of child benefit will increase the public expenditure by increasing the burden of government though the cost is less than the benefits.
• Increases economic activities: it leads to increase in economic activities as the rise in payout will increase money supply in the economy.   

   

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