Suppose the federal government increases the unemployment benefits financed by higher income taxes. In this case, which of the following is likely to occur?

Question

Quizplus · Accepted Answer

By increasing unemployment benefits and reducing the opportunity cost of not working, it is likely that more people will choose to remain unemployed or take longer to find new jobs, which can create a disincentive for job search and decrease labor force participation. This can lead to a slower economic growth and potentially lower GDP. However, it is worth noting that the impact of this policy on the economy is not entirely clear and can depend on various factors such as the level of unemployment before the policy change and the overall state of the economy. The other options listed are unlikely effects of this policy change.

Suppose the Federal Government Increases the Unemployment Benefits Financed by Higher