An increase in unemployment insurance payments would,in effect,________ the amount of time spent searching for a job,which would increase ________ unemployment.
A)increase; cyclical
B)increase; frictional
C)decrease; cyclical
D)decrease; frictional

Question

Quizplus · Accepted Answer

Increasing unemployment insurance payments would provide support to workers who are unemployed and seeking jobs, allowing them to take more time to search for a suitable job. This would lead to an increase in frictional unemployment, which is the unemployment that arises from individuals searching for a better job match. However, it would not affect cyclical unemployment, which is the unemployment that arises due to changes in the business cycle. Therefore the options (A) and (C) can be eliminated. Option (D) is incorrect as decreasing unemployment insurance payments would likely reduce the duration of unemployment for workers, decreasing the frictional unemployment.

An Increase in Unemployment Insurance Payments Would,in Effect,________ the Amount