Help quick question
When tax avoidance occurs where people send there money to a different country.. Is it correct to say this a leakage from the circular flow? and then can you relate this to a decrease in the multiplier?
Also, When evaluating subsidies provided by the government to reduce inequality is it correct to say... That it may lead to increased borrowing to fund the subsidies and in turn this would increase the national debt. This then creates a opportunity cost for future generations as interest payments on the national debt means less money will be available for public services in the long run therefore increasing inequality in the future.