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Unemployment - Coggle Diagram

- - - - Low demand for goods caused by fall in purchasing power leads to a fall in investment by firms
    - - The economy is producing within its PPC, hence a portion of the resources of the economy are being wasted, and hence there is a fall in production
  - - - Quality of the workforce will worsen as there will be erosion of skills when the labour force is unemployed for a longer time and hence, this limits the potential growth of the economy.
    - - The unemployed will not be paying income taxes as they are not earning an income and will spend less so will be paying less for GST. The government will also need to spend more on the welfare of these unemployed people and hence, the government will run into a budget deficit.
  - - - Unemployed individuals do not earn a salary, so when the unemployment rate is high, more people do not earn income, leading to a fall in purchasing power.
    - - Less income leads to less savings
    - - There is a fall in material standard of living as income reduced and non-material standard of living will be affected as well as the unemployed may not be able to afford healthcare etc.