Tag: government-spending

3 pages tagged government-spending.

Pages

Chapter 35: Economic Sectors — Economics 101

The circular flow model — how households, firms, government, and the foreign sector exchange goods, factors, and money — plus the financial sector that sits in the middle of every transaction.
Chapter 38: GDP — Government Spending and Exports — Economics 101

The G and (X − M) components of GDP: what government counts as spending, why transfer payments don’t, and how exchange rates and interest rates push net exports up or down.
Chapter 50: The Keynesian View and Fiscal Policy — Economics 101

Keynes challenged classical economics by showing that recessions can persist because wages are sticky and saving doesn’t automatically become investment. His remedy — government spending during recessions — works through a multiplier effect. But the inflation-unemployment trade-off he implied breaks down when inflation expectations shift.