2.3 unemployment (impact)

Question 1

problems of unemployment to the individual

Answer 1

loss of income can lead to financial difficulties

can cause pyscological stress, anxiety etc

prolonged unemployment can lead to skill depreciation

Question 2

problems of unemployment to the firms

Answer 2

a decrease in consumer spending

employee morale and productivity may suffer in an uncertain economic environment

high turnover rates can lead to increased training costs

can hinder innovation as firms may have limited resources

Question 3

problems of unemployment on the economy

Answer 3

decreased tax revenues = affecting government budgets and ability to fund public services

increased social welfare costs (benefits)

waste of human capital and skills

leads to economic slowdown or recession

decrease in AS