An increase in the minimum wage can affect the economy in several ways. First, an increase in minimum wage will put more money in the pockets of consumers, especially lower income consumers who are less likely to invest additional income. This can be positive for the economy because it means businesses will be generating more income.
It also means that businesses have to invest more of their revenue in their employees however, so the cost of goods and services may increase to make up for it. Another way an increase in minimum wage may impact the economy is that it may lead to increases to inflation over the long term.
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