Which of the following is a cost of unemployment to the economy?
A) The opportunity cost of unemployment.
B) The tax and benefits effect.
C) The reverse multiplier effect.
D) All of the above.

Question

Quizplus · Accepted Answer

All of the above choices are costs of unemployment to the economy. The opportunity cost of unemployment refers to the lost economic output that could have been generated if those who are unemployed were instead productive members of the workforce. The tax and benefits effect refers to the increased burden on taxpayers to provide benefits such as unemployment insurance and welfare to those who are unemployed. The reverse multiplier effect occurs when the decrease in economic activity from unemployment leads to further job losses and economic downturns.

Which of the Following Is a Cost of Unemployment to the Economy