During bad times like now, automatic fiscal stabilizers will: decrease/ increase unemployment compensation ?
Increase unemployment compensation.
each unemployed person will get the same amount - its just that there is more of them.
by increasing unemployment compensation, how is it that people will get the motivation to look for work? I.e. how is this going to stimulate the economy?
Well that’s the dilemma in labor economics: Subsitituion effect = the more money people get the higher the opportunity cost for leisure and the more they want to work Income effect = the more money people get allows them to spend more time on leisure with less consequences