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Explain consequences of unemployment |
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Answer» Answer: Unemployment has MANY consequences. Explanation: 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. Loss of tax revenue - unemployed PEOPLE are not earning and not paying tax. The government has reduced revenues to SPEND on public services. Increase in government expenditure - the government has to pay out benefits to support the unemployed - less revenue and more expenditure. 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. |
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