Question

how does employement affect gdp ?

Answer 1

Employment is positively related with GDP. Higher the employment rate means more people are working. This indicates more people are getting salaries or wages which they can spend ( consume) or invest. In either way, it will lead to increase in GDP. Increase in consumption will lead to more demand of goods so firms will produce more resulting in higher GDP. The income which is not consumed is saved by individuals which help in expanding production capacity as firms take loans by converting the savings into productive investment. This way the cycle continues and economy prosper.