Question

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

Answer 1

Answer:

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

Explanation:

Edge20

Answer 2

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