How_Money_Works_-_The_Facts_Visually_Explained

(Greg DeLong) #1

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GOVERNMENT FINANCE AND PUBLIC MONEY

Attempting control

DOMESTIC
EXPENDITURE
Amount spent by firms,
households, and the
government.

FOREIGN BALANCE
Difference between
exports and imports.

NATIONAL INCOME
Total earned by households,
firms, the government, and
the foreign balance.

Government
spending
Amount spent by
the government.
See pp.128–129

Imports
Purchases from the
rest of the world.
See pp.136 –137

Exports
Purchases by the
rest of the world.
See pp.136 –137

National income
National income is the total
amount earned by every sector
of the economy and from the
foreign balance (also known
as the balance of payments).
National income accounting
is a method that a national
government uses to measure the
level of a country’s economic
activity in a given time period.

Income equals expenditure
The idea of national income
means that every penny spent
in one part of the economy
must equate to a penny earned
elsewhere, and the economy’s
total earnings must match its
total spending. This basic idea
allows economists to build
and study models such as
the MONIAC machine.

NATIONAL INCOME ACCOUNTING


US$4.29


trillion


Japan’s Gross National


Income (GNI) in 2015


GOVERNMENT
REVENUE
Amount taken by the
government in taxes.

114-115_OV_Attempting_control.indd 115 13/10/2016 15:36

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