Th2.1: Unemployment Impacts on Government

Question 1

What does the reduced income result in?

Answer 1

a fall in tax revenues and higher spending on welfare payments for families - opportunity cost

Question 2

What will increase if the government have to spend more money on families welfare?

Answer 2

the budget deficit

Question 3

The government don’t want to worsen the budget deficit so what might they do to tackle this?

Answer 3

raise taxation or scale back spending on public goods