Economists would predict that, other things the same, the more generous unemployment compensation a country has,
A)the shorter the duration of each spell of unemployment, and the higher the unemployment rate.
B)the shorter the duration of each spell of unemployment, and the lower the unemployment rate.
C)the longer the duration of each spell of unemployment, and the higher the unemployment rate.
D)the longer the duration of each spell of unemployment, and the lower the unemployment rate.

Question

Quizplus · Accepted Answer

Economists predict that more generous unemployment compensation leads to longer spells of unemployment, as individuals may be less motivated to search for work or may hold out for higher-paying jobs. This, in turn, can lead to a higher unemployment rate. Therefore, choice C is the correct answer.

Economists Would Predict That, Other Things the Same, the More