Answer to Question #139456 in Macroeconomics for yazeed

Question

discuss the costs and consequences associated with unemployment

Answer 1

Solution

Consequences of unemployment

1.Loss of output to the economy - the unemployed could be producing goods and services and if they are not, then GDP is lower than it could be -this is the opportunity cost of unemployment

2.Loss of tax revenue - unemployed people are not earning and not paying tax. The government has reduced revenues to spend on public services.

3.increase in government expenditure - the government has to pay out benefits to support the unemployed - less revenue and more expenditure.

4.loss of profits - with higher employment firms are likely to sell more and make higher profits. If they make less profit because of unemployment, they may have less funds to invest.

cost of unemployment

1.unemployment effect the living standard of individuals. they not only loss their income but also loss their mental and physical health.

2.unemployment can increase crime rate in society because people will adopt unwanted ways to fullfill there economical needs.

3.it can reduce the GDP of nation because government have to give some benifits to the unemployed people to sustain.