|
 | How does unemployement affect the circular flow model? | |
|
| Unemployment slows down this flow by the lack of money inflow and outflow. | |
|
|
|
|
|
|
| When money is not pumping in the economy.. | |
|
| ..its growth becomes sluggish. | |
|
|
|
|
|
|
| An economy may show signs of jobless recovery with continual increase in the rate of unemployment. | |
|
| Due to increase in competition for jobs and wide availability of labor, the cost of labor decreases significantly. Those who are employed will be severely affected in case of rise in unemployment in the economy. | |
|
|
|
|
|
