How might a government deficit affect the circular flow of income?

Advanced Placement (AP)

2 answers:

mihalych1998 [28]3 years ago

8 0

Answer:

D. Government spending could drop due to the deficit, and the economy could slow down.

Explanation:

Edge20

JulsSmile [24]3 years ago

5 0

Answer:

Option B

Explanation:

Government deficit is a situation where government print additional currency to make up the gap. The income flow is not affected immediately but gradually. So as a precautionary measure government increases price and curtail people from expenditure and thus reduces the tax. The government deficit, if used an investment can generate more income, employment and other tangible benefits.

Hence, option B is correct

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