GDP and GDI: Two Sides of the Same Coin (Theoretically)

One of the starting points for understanding macroeconomics is to understand basic measures of the economy and what we call the "circular flow" of goods and services.  The "circular flow" refers to the idea that firms are the economic "agents" who produce and sell all our goods and services for sale, and that households are … Continue reading GDP and GDI: Two Sides of the Same Coin (Theoretically)

Congressional – FAIL economics

In a previous post I noted that members of Congress usually don't understand economics at a level to even pass a Principles Econ 201 or 202 course.  More proof from Pat Garafalo of Think Progress.  Apparently Rep. Shadegg of Arizona, a Republican representative for at least 5 years doesn't understand that consumer spending is essential … Continue reading Congressional – FAIL economics

Multiplier in Action – The Circular Flow

As principles students learn early on, the economy is made of a circular flow of goods, services, and labor. Total spending becomes the $ firms can use to pay workers, which becomes income for those households, which in turn becomes more spending that supports more jobs.  The economy grows (and employment grows) when something injects … Continue reading Multiplier in Action – The Circular Flow