IF Unemployment insurance were so generous that it paid laid off workers 95 percent of their regular salary ?

Question

IF Unemployment insurance were so generous that it paid laid off workers 95 percent of their regular salary ?

Answer 1

A. Frictional Unemployment would fall
B. The official unemployment rate would probably understate true unemployment
C. The official unemployment rate would probably overstate true unemployment
D. There would be no impact on the official unemployment rate
E. None of these answers

Correct Answer: The official unemployment rate would probably overstate true unemployment ✔

Last Updated: June 18, 2019