Question

7

What happens to the amount of money the government collects in taxes if unemployment is high?
It is harder to collect.
It stays the same.
It goes down.
It goes up.
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Answer 1

If unemployment is high, the amount of money the government collects in taxes generally goes down.

Step-by-step explanation:

If unemployment is high, the amount of money the government collects in taxes generally goes down. This is because when unemployment is high, there are fewer people working and earning income. As a result, there are fewer taxpayers contributing to the government's tax revenue.

For example, when unemployment is high, people may have reduced or no income, leading to a decrease in the amount of income tax collected by the government. Additionally, high unemployment can lead to lower consumer spending, which affects sales tax revenue.

Overall, high unemployment negatively impacts the government's tax collection as there is a decrease in taxable income and consumer spending.

Learn more about impact of high unemployment on government tax collection