Tuesday, 4 December 2012

If GDP = C + I + G + (X-M)

The Government and media commentators are obsessed with our GDP growth.  When the Government’s spending is in balance GDP may be a relevant measure but when we are running a huge deficit and need to cut government expenditure it’s not so helpful.  We should obviously be interested in growth associated with (Consumption goods & services (C) + Investments (I)  (Exports (X)  Imports (M)) but when 50% of the economy is Government Spending (G) we should not expect to grow GDP whilst hacking back G

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