The Impact of Unemployment (Edexcel IGCSE Economics)

High levels of unemployment reduces consumer incomes. As a result, demand for goods and services falls

In response, firms reduce the level of output produced

As the economy contracts, there is a more inefficient use of available resources

Levels of poverty rise as unemployment rises and incomes fall

Some workers may struggle to afford afford the basic necessities, such as food, shelter and clothing

Government's receive less tax revenue and have higher expenditures in the form of welfare payments

The level of optimism that consumers and businesses have regarding their expected financial situation falls

• Consumers have less job security, so save more

• Businesses expect to receive less sales revenue so they delay any investment plans

Inequalities rise as some individuals in society struggle to access healthcare and education

There may be increased societal problems, such as an increase in crime rates