Question

In: Economics

Discuss the impact of the Federal Government Shutdown on both the households and individual workers. Can...

Discuss the impact of the Federal Government Shutdown on both the households and individual workers. Can you explain in 4 paragraphs?

Solutions

Expert Solution

Impact of federal government shutdown :

On households :

  1. Households with less money cut their expenditures and also those with significant resources reduces their spendings. They get discouraged from spending on restaurants, clothing, entertainment, electronic purchases and many more activities. This reduction in their spending is due to leisure time. Example - rather than going to restaurants they got time to cook themselves.
  2. In addition to this , in the long run household's savings gets depleted and payments for health insurance, educational fee, and bank interest gets affected as people don't have money in their bank accounts to make such payments. Since government has no money in its treasury to run day to day activities, government stops providing many public services and because of this, day to day operations of public also gets affected.

On individual workers :

  1. As the government day to day operations got affected , nonessential federal employees would stay at home. Because of this employees don't get their payments to meet their expenditures. Sometimes employees were required to continue working at their jobs, although they were not receiving paychecks. This creates burden for them to meet their mortgage payments and other commitments.
  2. If the shut down continues for longer period of time, then employees moral gets affected and in future it becomes problem for them to continue their work as they lost their  job skills due to long leisure. Because of this, in future, companies may incur additional training cost and production efficiency reduces.

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