Government Spending

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to pay for their needs such as education, housing, and retirement. Due to the fact that the government finances these factors the people have less reason to save which decreases the capital for new investments. On the contrary, with government spending decreasing, people will have to start becoming more independent and finance their own future which will be far better in the long run. Conversely, the negative malefactors of decreasing government spending are economic decline and lower demand. Without the budget deficit extra capital spending cannot be financed, which decreases the stock of national assets. For example, lower spending on the transport infrastructure diminishes the supply-side capacity of the economy. When the supply decreases then fewer people are needed to produce leading to fewer employees. Also, a decrease in borrowing can be a deterrent to demand when other sectors of the economy are suffering from weak spending. Due to the decrease in spending the economy may ...

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