Peter Cooper: Heteconomist

We understand that, as a rule, total spending must equal total income (this was explained in part 4 of the series). But this raises a question. Is it spending that determines income or, instead, income that determines spending? At first glance, it might seem plausible that income determines spending. After all, when an individual household receives income, it will invariably spend some of it. If a member of the household receives a pay increase at work, the household will have more...

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