When the unemployment rate is high, there is political demand to increase the benefit period for unemployment compensation. In a standard analysis, doing so will lead to:
A) reductions in unemployment.
B) increases in the unemployment rate.
C) more job creation.
D) more job destruction.

Question

Quizplus · Accepted Answer

Increasing the benefit period for unemployment compensation can create a disincentive for individuals to actively seek employment, leading to an increase in the unemployment rate. This is because they may choose to rely on unemployment benefits instead of actively searching for a job.

When the Unemployment Rate Is High, There Is Political Demand