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FALLACY OF DIVISION: The logical fallacy of arguing that what is true for the whole is also true for the parts. In the study of economics, this takes the form of assuming that what works for the aggregate, or macroeconomy, also works for parts of the economy, such as households or businesses. The contrasting fallacy that you should check out is the fallacy of composition.
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Lesson 11: Circular Flow | Unit 3: Government
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Page: 14 of 22
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Topic:
Government Borrowing
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When government does not collect enough taxes to pay for purchases, it borrows through the financial markets.- The federal deficit is borrowing by the federal government to make up the difference between taxes and spending.
- State and local governments also borrow through financial markets.
- The green flow leaving the financial markets and entering the government sector is government borrowing.
- Government sector purchases can be less than taxes, which means government saves to the financial markets.
- Many state and local governments actually save. State and local saving reduces total government sector borrowing in times of high federal deficits.
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AGGREGATE DEMAND SHIFTS Changes in the aggregate demand determinants cause the aggregate demand curve to shift. The mechanism is comparable to that for market demand determinants and market demand. There are two alternatives--an increase in aggregate demand and a decrease in aggregate demand. An increase in spending by any of the four sectors--household, business, government, and foreign--shifts the aggregate demand curve to right. A decrease in spending by these four sectors shifts the aggregate demand curve to left.
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RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time touring the new suburban shopping complex hoping to buy either a tall storage cabinet with five shelves and a secure lock or a birthday greeting card for your grandmother. Be on the lookout for celebrities who speak directly to you through your television.
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The average length of a "business lunch" is about 36 minutes.
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"It's usually the last ounce of effort that tips the scales of success." -- Rick Beneteau
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PSBR
Public Sector Debt Repayment
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