The idea of a Universal Basic Income Guarantee (UBI) has become increasingly popular, and has generated a surprising amount of interest across the political spectrum. Under such a scheme, every citizen would receive a minimum stipend directly from the U.S. government, regardless of their income. Using the theoretical tools of this chapter, explain how such a scheme might affect national consumption and national labor supply.

How would your answer change if the government needed to raise taxes to accomplish this scheme, with the result that workers would take home a smaller fraction of their wage for every hour worked?