Question

What are the consequences of high unemployment​

Answer 1

There will be less tax revenue and more governmental borrowing

There will be lower spending and lower output since the unemployed are unable to purchase goods.

Overall there will be an inefficient low functioning government

Answer 2

High unemployment indicates the economy is operating below full capacity and is inefficient; this will lead to lower output and incomes. The unemployed are also unable to purchase as many goods, so will contribute to lower spending and lower output. A rise in unemployment can cause a negative multiplier effect.