Question

Government unemployment insurance tends to A. have no direct effect on the unemployment rate. B. increase the unemployment rate by increasing the opportunity cost of job search. C. decrease the unemployment rate by lowering the opportunity cost of job search. D. increase the unemployment rate by lowering the opportunity cost of job search. The payment of government unemployment insurance reduces the severity of recessions by A. prolonging the job search period for unemployed workers. B. giving extra income to everyone and thus increasing consumption spending. C. preventing a huge drop in income and spending for the unemployed. D. adding to the level of frictional and structural unemployment.

Answer 1

Answer:D.increase the unemployment rate by lowering the opportunity cost of job search.

Explanation:

What is an opportunity cost?

An opportunity cost is when someone forfeit the benefits of one alternative for the other alternative which has benefits also however this means that all the benefits of the non chosen alternative are all lost.

In this case the opportunity cost of choosing a job is lowered because as people receive this government unemployment benefits they stop searching for jobs and just enjoy receiving the government benefit.