What if the government took 1 million unemployed people and paid them $2,500 per week or $130,000 per year ($2,500 x 52 weeks) to dig a hole in the ground from 8:00 a.m. to 12 noon, then had them refill the hole again in the afternoon. What effect would this specific action have on the actual production of the economy? (A deep thought question)
Multiple Choice:
The activity itself (digging a hole in the ground) is not really producing anything. Although this is a very clever idea to temporarily reduce the national unemployment rate, having people do this type of useless work will not increase the efficiency or the productive potential of the economy. Taking money from taxpayers to pay for this type of wasteful government program might seriously weaken the economy as the government takes spending power away from the productive and creative private sector (C+I) component of the economy. All of the above statements are essentially correct.