High rates of unemployment are undesirable because:
A)they encourage high levels of per capita savings.
B)they result in the loss of potential output of goods and services.
C)they lead to high rates of inflation
D)they lead to high levels of individual consumption.
E)they lead to excessive increases in informal activities.

Question

Quizplus · Accepted Answer

High rates of unemployment means that a significant portion of the labor force is not being utilized, leading to a loss in potential output of goods and services. This can result in decreased economic growth and development for a country. The other options are incorrect as high rates of unemployment typically lead to low levels of consumption, high levels of informal activities, and potentially lower inflation rates. Per capita savings might increase due to uncertainty about future employment prospects, but this is not desirable as it can hinder economic activity.

High Rates of Unemployment Are Undesirable Because