Macroeconomics 11th Edition by Michael Parkin

Exercise 28

Use the following information to work the Problem.
Policy Changes Scheduled to Take Effect in 2013
A host of significant provisions of the Job Creation Act of 2010 are set to expire on January 1, 2013, including the emergency unemployment benefits and a temporary reduction of 2 percentage points in the Social Security payroll tax.
a. Explain the potential demand-side effects of extending unemployment benefits and not increasing the Social Security payroll tax.
b. Explain the potential supply-side effects of these fiscal policy actions.
c. Draw a graph to illustrate the combined demand-side and supply-side effect of these fiscal policy actions.