Question

People who don’t work at all do not affect the economy.


True


False

Answer 1

False.

Even people who don’t work still affect the economy. Reasons/examples:
- They consume goods and services, so they contribute to aggregate demand (retirees, students, the unemployed).
- They often receive transfers (pensions, unemployment benefits, welfare), which affect government budgets, taxes and public spending.
- Their non‑work status influences labor supply and wages (fewer workers can push wages up; discouraged workers alter labor‑force participation statistics).
- Savings and spending decisions by non‑workers affect financial markets and investment.
- Unpaid work (caregiving, household production) has economic value even if it isn’t counted in GDP.
- There are longer‑run effects on human capital, productivity and social costs (healthcare, crime, retraining).

So non‑workers have multiple direct and indirect economic impacts.