What would be a long-term consequence of sustained high unemployment?

Sustained high unemployment can lead to economic stagnation and rising social issues due to a variety of interconnected factors. When unemployment remains high over an extended period, many individuals struggle to find work, which can result in a decrease in overall consumer spending. As more people remain jobless, disposable income dwindles, leading to reduced demand for goods and services.

The economic stagnation arises from this drop in consumer spending and business investment, which can slow down economic growth, prolonging the period of high unemployment. Furthermore, prolonged unemployment can exacerbate social issues such as poverty, crime, and mental health problems, as individuals and families may face significant hardships without a stable income.

In contrast, the other options do not accurately reflect the long-term consequences associated with high unemployment. For instance, while one might expect consumer spending to increase with higher incomes, sustained high unemployment leads to the opposite effect. Similarly, rapid inflation typically occurs when demand outstrips supply, which is not the case during high unemployment; instead, inflation may decrease due to lower spending. Increased foreign investments tend to occur in stable, growing economies, so high unemployment would discourage such investments. Thus, economic stagnation and rising social issues encapsulate the broader, more systemic effects of prolonged