Which of the following is an economic cost of rising unemployment rates?

Question

Quizplus · Accepted Answer

Rising unemployment rates lead to a decrease in the production of goods and services, which results in a lower Gross Domestic Product (GDP). Hence, A is the correct choice. B is incorrect as an inward shift in the production possibility frontier indicates a decrease in potential output, which is not necessarily caused only by rising unemployment rates. C is incorrect since a fall in the amount of unemployment benefits paid by the government is a result of government policy and not necessarily linked to rising unemployment rates. D is also incorrect as unemployment benefits may not be enough to cover the loss of income from a job, and hence, rising unemployment rates may not necessarily increase income levels.

Which of the Following Is an Economic Cost of Rising