The natural rate of unemployment:
A) would increase if a larger percentage of the labour force were over 25 years old.
B) would increase if union membership fell.
C) would increase if unemployment benefits were increased.
D) will always remain fixed.

Question

Quizplus · Accepted Answer

Increasing unemployment benefits can lead to a higher natural rate of unemployment as it may reduce the incentive for job seekers to accept jobs quickly, thus increasing frictional unemployment.

The Natural Rate of Unemployment