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QuizMultiple Choice

Entrepreneurship — Unit test

Question 1 • IL-Economics

How does a high unemployment rate affect the economy?

Answer
A
A high unemployment rate has no effect.
A
A high unemployment rate has little effect.
A
A high unemployment rate has a very positive effect.
A
A high unemployment rate has a very negative effect.

Explanation

When unemployment is high, many people who want to work cannot earn wages. This reduces household spending and tax revenue, while increasing the need for public support. As a result, high unemployment generally has a very negative effect on the economy, matching choice D.

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