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why would a country want to put themselves at a deficit? That pretty much equates to them spending more money than they have. I guess it kind of depends on how the country is using this money to put themselves at a deficit. (i wont pretend to know **** all about national budgeting) 

 

is there anymore to the question? If a country is investing more money than they have, putting them at a deficit, they likely expect those investments to mature well. There's no reason a country would put its self at a deficit if it didn't see something to gain.

 

You'd likely know better if you're taking a course on this **** 

 

edit: or ****, I guess they could just be spending more on everything in general... alright, well as it turns out I don't know **** about economics. 

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Lowering taxes will increase investment from the private sector since this means people get a bigger return for their investment, thus it also increases the gdp because you are going to have more money in the economy. With the investments going up you are going to have an increase in industry and in the private sector so this will creat a demand for a skilled workforce so employment is going to go up. Wages should also increase due to the private sector having expanded this being an incentive for companies to increase the pay of their workforce.

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lmao

 

GDP = C + I + G + (X - M)

 

National government wants to run a deficit. They maintain spending but lower taxes, which means they aren’t making as much back to cover spending (which would eventually run them into a deficit).

 

Nominal GDP increases

Money is being injected into the market due to government spending, but taxes have decreased so consumer spending goes up.

 

If C (consumer spending) increases then GDP increases.

 

Employment theoretically increases. Cuts in direct taxes are effective across most kinds of unemployment (because companies now have extra funds to invest in human capital).

 

Investment increases because consumers have more disposable income to invest (less taxes).

 

Many macroeconomists would say that you don’t have enough information to answer whether wages would increase at this point. If this is the entire question, you could say that wages increase in the long-term, even given the principle of sticky wages, because government spending is injecting more money into the market as a result of decreased taxes, thus increasing the amount of currency in circulation and raising the need for employers to eventually up worker wages according to inflation. This is a realist interpretation of wages according to macroeconomic theory.

 

Source:

Economic work

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Just tell me what is this for? Homework or a test or is your drug dealer asking it?

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This players questions have been answered and the situation resolved.

Should you wish to have this reopened, please PM me your reasons why it should be so.

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