Which are ways that the economy is affected when the unemployment rate goes up? Select all that apply

Question

(1 point)
I Fewer people pay income taxes.
O Sales tax rates go down.
Many people refinance their houses.
O Less money is spent on investments.
People spend more money on larger items.

Answer 1

When the unemployment rate goes up, the economy is affected in the following ways:

• Fewer people pay income taxes. (Correct)
• Less money is spent on investments. (Correct)

The other options are generally not true or do not directly relate to the impacts of rising unemployment:

• Sales tax rates do not necessarily go down simply because unemployment rises.
• Many people refinancing their houses may occur, but it's not a direct economic effect of rising unemployment.
• People generally spend less money on larger items during periods of high unemployment, not more.

So the correct selections are:

• Fewer people pay income taxes.
• Less money is spent on investments.