Explain why the large gap between the rich and the poor led to economic instability

It led to economic instability because of the fact that you have 1% of the economy making all the money while the other 99% are the ones contributing to the money in circulation by buying and selling products. The 1% gains a larger profit off of the efforts put in the 99%, thus creating a gap in the distribution of wealth.

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nikitavidya0 nikitavidya0 · Answer 2 · 2021-12-16T10:14:46+01:00

The large gap between the rich and the poor led to economic instability due to disequilibrium in the market as well as lower per capita income in the nation.

Economic instability is the state where the economy experiences disbalance in its variables that form economic efficiencies such as inflation, demand, employment, interest rate, and others.

Thus, the income gap between rich and poor implies there would be less income with a higher consumption rate while rich people would hold higher income but would consume less.

Therefore, it would disturb the aggregate demand and supply forces of the market due to unequal wealth distribution, which ultimately brings a fall in the GDP of the nation.

Learn more about economic instability here:

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