Which of the following is a cost of unemployment?
I. output foregone
II. unemployment compensation that must be paid
III. rising inflation that erodes the value of money
A) I, II, and III
B) I and II
C) I and III
D) II and III

Question

Which of the following is a cost of unemployment? 
I. output foregone
II. unemployment compensation that must be paid
III. rising inflation that erodes the value of money
A) I, II, and III
B) I and II
C) I and III
D) II and III

Quizplus · Accepted Answer

The cost of unemployment includes the output foregone and the unemployment compensation that must be paid. Rising inflation that erodes the value of money is not a direct cost of unemployment. Hence, options A and C can be eliminated. Option D includes rising inflation, which is not directly related to unemployment, and hence can be eliminated as well. Thus, the correct answer is B.

Which of the Following Is a Cost of Unemployment