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The Complete Idiot's Guide to Economics, 2nd Edition by Tom Gorman

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Government: He’s Your Uncle, Not Your Dad

As we’ve seen, the U.S. government—Uncle Sam—spends money on goods and services, thus boosting GDP. The government also makes transfer payments, which are not counted in the government’s contribution to GDP. Transfer payments can, however, contribute to consumption expenditure if they wind up in the hands of households who will spend that money, which they often do. But that’s part of C, and we are now discussing G.
The government’s money comes from only two sources: taxes and borrowing. The government levies taxes on and borrows funds from the private sector. This is true of government at the federal, state, and local levels. (Yes, government agencies do charge fees, for instance at national and state ...

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