If unemployment benefits became more generous it would be likely to _____ frictional unemployment and _____ the natural rate of unemployment:
A)Increase; increase
B)Increase; not change
C)Not change; increase
D)Increase; decrease

Question

If unemployment benefits became more generous it would be likely to _____ frictional unemployment and _____ the natural rate of unemployment:
A)​Increase; increase
B)​Increase; not change
C)​Not change; increase
D)​Increase; decrease

Quizplus · Accepted Answer

Generous unemployment benefits can increase frictional unemployment by reducing the incentive for unemployed individuals to quickly find new jobs, thereby potentially increasing the natural rate of unemployment as more people remain unemployed for longer periods.

If Unemployment Benefits Became More Generous It Would Be Likely