Final answer:
Increases in unemployment benefits can increase the natural rate of unemployment by lowering the opportunity cost of being unemployed, making individuals less eager to find new work.
The correct option is B.
Step-by-step explanation:
The effect of increases in unemployment benefits on the natural rate of unemployment in an economy can be quite significant. Public policy, like providing unemployment insurance and other benefits, can increase the natural rate of unemployment by lowering the opportunity cost of being unemployed. This makes individuals less eager to seek new employment, as their financial needs are partially taken care of by these benefits. It's important to note, however, that this effect can vary across different segments of the population and the economy, so it does not 'always affect everyone in the economy the same' as some might be more dependent on such benefits than others.
Therefore, the correct option in answer to the question is B) increase the natural rate of unemployment.