During a Recession, Which of the Following Does Unemployment Insurance

question 167

Multiple Choice

During a recession, which of the following does unemployment insurance ensure?  

• A) that the disposable income of those who are unemployed will increase above the usual level 
• B) that disposable income does NOT fall by as much as GDP decreases 
• C) that disposable income increases as GDP falls 
• D) that the marginal propensity to consume increases

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Definitions:

Decision-Making Strategy

A systematic approach or method employed to choose among alternatives and make informed choices.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Behavioural Economics

A field of study that examines how psychological, cognitive, emotional, and social factors affect economic decisions and market outcomes.

Economic Decisions

Choices made by individuals, households, or firms regarding the allocation of resources.