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GDP = C + I + G + X - M
China is increasing I; we increased G. Both increase GDP. The circular flow is working (the increase in G is multiplied) but not as much as we need it to do.
EconomPic: U.S. Economy on Continued Life Support
Wednesday, May 26, 2010
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Correct me if I'm wrong, but this looks like a pure Keynesian response to economic crisis. Instead of attempting to lower taxes to shock consumers and producers back to life, the government choose to pour sacks of money into the economy. So far, to me at least, it looks like it is working.
ReplyDeleteIt is good to see that the stimulus worked and we just didn't throw money away into ideas that have been shown to be flawed. It is promising as well that it will continue to grow in the subsequent quarters. It would have been a crushing blow to find out that none of that money really helped anything.
ReplyDeleteI agree with Jared. It is great to see that the stimulus package is having an impact on our economy. Stiglitz stated in his book that the package was not nearly enough to make changes...but this evidence seems to contradict that statement. Its nice to see all of our tax dollars (and economic theory) actually having an effect.
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