eli5 How do economies grow? Who grows them?
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It’s largely about the flow of money. Money that is flowing is doing work, money sitting around is doing nothing
Increasing production increases cash flow in, but also increases expenses which is cash flow out, more movement of money is generally seen at a healthier economy
Therefore the summed up difference between cash flow in vs cash flow out of all businesses is the primary metric we use to measure “the economy”, its how much “profit” *hypothetically could* be realized in a given time period
Example: Various countries have a VAT (value added tax) which is an attempt to spread the taxing of the economy through the various steps of manufacture. As opposed to sales tax which on the books is only paid by the customer, not the intermediate businesses who only sell to other businesses. One is taxing the economy, one is taxing consumption, both have trade-offs
Please do let me know where I got this wrong, as I have no formal economic education. The “example” is very weak and poorly explained
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