Our economy is measured by GDP. Gross Domestic Product, which is
the total dollar value of all final goods and services sold per
year. One approach national accountant’s use is the "expenditure
approach" for counting this. Using the expenditure approach
there are four variables. Consumption, Gross Investment,
Government Purchases and Net Exports (Exports minus Imports). In
America about 70% of GDP is Consumption. This is what we spend
each year with what we have left over after taxes. Gross
Business Investment is about 14%, Government Purchases are about
20% and Net Exports is a negative 4%, meaning we import more
than we export. GDP is about 14 Trillion a year, so Consumption
being 70% is about $9.8 Trillion a year. Those policy makers,
whose job it is to control inflation /deflation and reduce
unemployment use either Fiscal Policy or Monetary Policy to do
their job Those who use Fiscal Policy are members of the Federal
Government. They have two options for doing the job. They can
raise taxes and reduce gove