Jump to content
Objectivism Online Forum

"Export booms" affect on "circular flow of income"

Rate this topic


airborne

Recommended Posts

I just got onto the topic of circular flow of income and expenditures. In the case of an export boom, spending, investments, imports would increase right?

...also tax income for govt.

So in todays world this would mean the government would see this as "inflation" or a "major current account deficit" and need to start increasing interest rates or some other policy to reduce "inflation"? something like this?

Link to comment
Share on other sites

Looking at this question and the other one you posted, I think your best bet would be to get a text that addresses various typical mistaken ideas in economics. If you haven't yet read Henry Hazlitt's "Economics in One Lesson", it's one good place to start.

Link to comment
Share on other sites

In answer to your question, trade, by definition, always makes one better of. Your income does not go up, but your consumption does, so trade is always a "deflationary" phenomenon. This is why the flood of Chinese-made goods is lowering, not raising prices around the world.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...