2.3 UNEMPLOYMENT (IMPACT)

Question 1

problems of unemployment to the individual

Answer 1

• loss of income can lead to financial difficulties
• can cause physcological 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