Question

PLEASE HELP----- Explain how the three groups (laborers, businesses, and government) are connected in regard to unemployment. How does a change in one group affect the other two? For example, if a business lays off thousands of employees, what impacts (social, political, or economic) might the lay-offs have on government and laborers?

Answer 1

When laborers are out of work, then they can't as often to buy product from business, which in turn the business loose money have to lay their laborers off,which creates a vicious cycle.Then at times the government will come up with their programs to help the business and try to keep the economy going.

Answer 2

When there is unemployment then there is low inflation rate. So, on the demand side of the labor market they are better. Seeing it from the wages point of view, they can buy more, then the real wage increases. On the supply side, wages will decrease because labor is higher. The business will be better is they hire laborers because then they will have to pay lower wages, but their demand will reduce due to the unemployment consumption spending. Then, their revenues are weakening. The government will face a fiscal deficit because they will have to give unemployment benefit in order to raise the demand to arrive to the equilibrium again.