Unemployment and the impacts

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  • Real Wage/ Classical
    • Unemployment
      • Frictional
        • People who have just left a job, and trying to find another
          • Uni graduates take more time to accept a job with appropriate wage rates.
      • Structural
    • Individuals+Government set such high wages, that businesses cannot afford to pay.
      • Hairdressers fire employees if they are doing jobs no longer needed e.g sweeping floors.
  • Unemployment high, inflation low > because demand is low as less people are employed
    • Not have as much money so they demand less.
    • Relationship between full employment+ inflation:
  • Impacts
    • The unemployed individuals
    • Businesses
      • Less employment to provide the same level of output
        • Decreases in demand, leads to a decrease in sales+profits, business may fail to grow+invest
          • Redundancies, reduced stock, no more training, closure of business > bankrupcy
    • The working population
      • Employees feel pressured + experience strain in the workplace where there has been redundancies
        • Same level of output needs to be done by fewer people
          • Higher taxes, Low cheap shops e.g Poundland thrive
  • Loss of income > decline in living standards, individuals don't have money to live well.
    • Loss of Confidence - may lose motivation to find a job
      • Decrease skills > Crime rates increase > Strains on police > Government spending
    • The unemployed individuals
  • Same level of output needs to be done by fewer people
    • Higher taxes, Low cheap shops e.g Poundland thrive

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