How does the economy “grow”? Where does the new money comes from?
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Imagine a village of sustenance farmers and their garden is the economy. They know that each person needs 1 lb of potatoes for each person to live. If they have 10 people in the village, they will need to grow 10ths of potatoes every day.
If the village grows to 12 people, the garden (economy) will need to now grow 12lbs of potatoes per day.
If the village wants to trade potatoes for something else, like medicine, they will need to expand their garden (economy) even more.
If the village wants to have a teacher, that is one less person that will produce potatoes, so each villager now needs to produce more than 1lb of potatoes. In exchange for not producing a material product, the teacher will provide a service to the village.
The economy just represents the total output and distribution of resources. You can produce goods, or services.
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