Question

what are the impact of unemployment in economics?in 150 words

Answer 1

IMPACT OF UNEMPLOYMENT
Effect on Economy

Unemployment rate depends on the economy to economy. In developed countries like United Sates and Europe the unemployment rate considered to be low because many people are self employed people and working in agriculture. In countries where there are less self employed and more population with less resources causes unemployment (Anderson, 2006).

Unemployment affects the economy adversely as the productivity falls below the normal level. When there is high rate of unemployment in the country, government has to suffer extra borrowing burden due to decrease in the production and less consumption of goods and services by the people. Not only the unemployed people consume less its even employed has weak purchasing power due to fear about their loss of their jobs. Unemployed not working and not contributing for income generation of the economy, but also they claim benefits from the government and it is an additional cost for the economy as a whole (Baker, 2009).