When the unemployment rate is high, there is political demand to increase the benefit period for unemployment compensation. In a standard analysis, this 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 may provide temporary relief for those who are out of work, but it can also create a disincentive for them to seek new employment. This can lead to an increase in the unemployment rate, as individuals may delay their job search or be less motivated to accept available job offers. Additionally, some employers may be hesitant to hire workers if they know that they will only be employed for a short period before re-entering the unemployment system. Overall, while extending the benefit period may seem like a solution to high unemployment, it can actually exacerbate the problem in the long run.

When the Unemployment Rate Is High, There Is Political Demand