An employment buffer stock scheme involves the government offering an infinite demand for labour. This means that
Answer: (b) the scheme will expand and contract on demand from workers for jobs.
Answer: Option (b).
The essence of the Job Guarantee (JG) is that the government provides an unconditional, open ended job offer at a socially-inclusive minimum wage to anyone who desires to work.
Instead of a person becoming unemployed when aggregate demand falls below the level required to maintain full employment, the person is able to enter the JG workforce.
Thus, the JG pool expands (declines) when private sector activity declines (expands).
Hence the JG fulfils an absorption function, which minimises the costs associated with the flux of economic activity when aggregate spending fluctuates.
It means that instead of the government setting some fixed 'budget' amount for a program, which then limits the scope of the spending, the government maintains an open-ended spending commitment and allows the actual expenditure in any period to be determined by how many workers turn up to get a Job Guarantee position.
This is what we call spending on a 'price rule'. The government sets the price and lets the quantity float.
Accordingly, the outlays on the program vary according to the strength of the non-government sector econoy.