Question

Use the static AD-AS model to explain how the Job Keeper policy worked to sustain the economy (even though unemployment increased).

Answer 1

The job keeper payment policy helps businesses affected by covid 19 to render cover to their wages so that they can continue with their job and earn an income.Under this policy wage subsidy is given by the government.The job keeper policy will benefit 6 million Australians for a period of 6 months.Eligible workers are ful time and part time employees , sole traders ,permanent visa holders,etc.Casual workers who work with their employees for a period of 12 months are eligible for the payment.. Eligible workers will receive $1500 for each eligible employee.Workers who are paid less than $1500 per fortnight will get $1500 per fortnght. Part time workers will receive $ 750 under job keeper payment.This policy is a big assurance from the government which will lend support to businesses aa well as workers. This will help busineses to continue working and the workers can remain with the employers.This policy will give same weekly wage to part time workers on a 15 hours basis per week and same weekly wage of 35 hours per worker to a full time worker.However for many $1500 per worker will cut their other payments.Workers who hold more than a single job will get job keeper payment for only one job.This policy will incentivise workers to stay attached to their employers .The employers will benefit because their wages will be more or less covered.But the employers will refrain from operating if their other costs become too large.