Asked by Victoria Overbey on Jun 30, 2024
Verified
During a recession unemployment benefits rise. This rise in benefits makes aggregate demand higher than otherwise.
Unemployment Benefits
Payments made by the government or a social insurance scheme to unemployed individuals who meet certain eligibility criteria.
Aggregate Demand
The combined demand for goods and services across an economy, pegged at a particular overall price level during a predetermined time period.
- Comprehend the functioning of automatic stabilizers such as unemployment insurance and welfare programs amid economic downturns.
Verified Answer
LS
Lianna SirelJul 06, 2024
Final Answer :
True
Explanation :
During a recession, an increase in unemployment benefits provides individuals with additional income, which in turn allows them to maintain or increase their consumption. This increase in consumption contributes to higher aggregate demand than would be the case without the rise in benefits.
Learning Objectives
- Comprehend the functioning of automatic stabilizers such as unemployment insurance and welfare programs amid economic downturns.