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Economic Growth

Economic Growth Rev 0

First pass at model depicting importance of Net Capital Accumulation on economic growth of firm - from firm's perspective

CUTBACKS OFTEN MAKE FISCAL DEFICITS WORSE

Cutbacks can have a counterintuitive effect. The government knows precisely how much it custs in spending. However, it cannot know the extent to which tax revenues shrink in a non-linear complex economic system as the economy contracts. In addition, the treasury has to spend more as automatic stabilizers activate and payments are made to an increasing number of unemployed workers. The effect of this is that initially the deficit shrinks, but later it rises as tax revenues fall short of expectations and more spending takes place.

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