The Personal Responsibility and Work Opportunity Act of 1996 established time limits for welfare dependence and caused aggregate:
A) Demand to shift to the right.
B) Demand to shift to the left.
C) Supply to shift to the right.
D) Supply to shift to the left.

Question

Quizplus · Accepted Answer

The Personal Responsibility and Work Opportunity Act of 1996 aimed to reduce welfare dependency by imposing time limits on the receipt of benefits. This policy change would have encouraged more people to seek employment or increase their work hours, causing an increase in the supply of labor. As a result, the supply of labor shifts to the right, which would lead to a reduction in the equilibrium wage rate and an increase in the equilibrium quantity of labor supplied and employment. Hence, the correct choice is C, where the supply shifts to the right.

The Personal Responsibility and Work Opportunity Act of 1996 Established