asked 215k views
2 votes
How does the decline of industry contribute to budget deficits?

asked
User Cory Roy
by
8.3k points

1 Answer

1 vote

Answer:

The decline of industry decreases aggregate supply, but it also decreases aggregate demand, i.e. fewer workers = lower demand for goods and services. Since the government receives money form taxing both industries and households, if both industries' and households' income decreases, the government will receive less tax revenue. Less revenue results in higher deficit.

Step-by-step explanation:

answered
User Chandrika Joshi
by
7.6k points

No related questions found

Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.

Categories