Compared to a labor market that has no unemployment benefit system, the unemployment insurance system of the United States probably
A) leads to shorter spells of unemployment.
B) increases the unemployment rate.
C) leads to lower post-unemployment wages.
D) provides for a lower standard of living while unemployed.
E) is less costly for firms.

Question

Quizplus · Accepted Answer

Unemployment insurance can increase the unemployment rate by providing financial support to unemployed individuals, which may reduce their urgency to find new employment quickly. This can lead to longer periods of job search and higher overall unemployment rates.

Compared to a Labor Market That Has No Unemployment Benefit