Gunslinger08
Lifer
- Nov 18, 2001
- 13,234
- 2
- 81
Alright, basic economics for you here, FBI.
Government spending is included in the GDP (minus taxes, which is almost always a surplus).
Government spending includes payments to workers, who then spend the money in the economy, thus it is counted twice in the GDP (minus taxes).
Deficit spending causes the printing of more unbacked money. This money leads to inflation of the US dollar. Inflation leads to lower interest rates. Lower interest rates leads to more loans, which leads to more spending, which raises the GDP.
Therefore, government spending through payment to workers raises the GDP, whether they are productive or not.
Josh
Government spending is included in the GDP (minus taxes, which is almost always a surplus).
Government spending includes payments to workers, who then spend the money in the economy, thus it is counted twice in the GDP (minus taxes).
Deficit spending causes the printing of more unbacked money. This money leads to inflation of the US dollar. Inflation leads to lower interest rates. Lower interest rates leads to more loans, which leads to more spending, which raises the GDP.
Therefore, government spending through payment to workers raises the GDP, whether they are productive or not.
Josh