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How does a store closure affect the economy

Question:

How does a store closure affect the economy

Answers

It depends on the size of the store. Irrespective of the size, closure of a store indicates decreased economic activity. It can be due to increased costs, decreased demands, or any other factor. Assuming a small store, the store-owner being the only labor, he/she loses income in the short run. With the store being closed, consumers who bought from that store will now decrease their spending (assuming the store sold some specialised good).

The spending in the economy would decrease. Thus, GDP will decrease. Depending on the size of the store, the impact will vary. Note that this is a simplified explanation based on too many assumptions. The results might vary if other conditions change.

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