economics question?

Question

What are the likely long run effects of the unemployment benefits policy?

Answer 1

Unemployment benefits give money to individuals who do not have a job. Thus, it causes individuals who are closest to the bottom of the socioeconomic ladder to forgo a job at all, since they can earn close to the same amount doing nothing that they would receive if they had a job. In response, then, it pushes wages up in order to get people to do those jobs. This increase in the price of labor will eventually cause the price of goods to go up, leading to inflation.