airborne Posted January 25, 2008 Report Share Posted January 25, 2008 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? Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted January 25, 2008 Report Share Posted January 25, 2008 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. Quote Link to comment Share on other sites More sharing options...
airborne Posted January 25, 2008 Author Report Share Posted January 25, 2008 cheers, its coming my way soon... =) love amazon Quote Link to comment Share on other sites More sharing options...
DavidV Posted January 25, 2008 Report Share Posted January 25, 2008 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. Quote Link to comment Share on other sites More sharing options...
airborne Posted January 25, 2008 Author Report Share Posted January 25, 2008 and it is also lifting income for Chinese people... Quote Link to comment Share on other sites More sharing options...
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