How does money move around?

How Money Moves Around

A weird thing about money is that every time you spend it, another person earns what you spent.

When you buy a juice box for 50 cents, you pay the storekeeper with the money you spent for it. You are the consumer; he is the producer. You spent; he earned.

Then, when the storekeeper wants to buy something for himself, he will spend your 50 cents. The storekeeper becomes the consumer. The person he buys from, the producer, will earn that 50 cents. This shows us how money keeps moving all the time.

The grand total of all the money spent and respent from what is made to be sold is our gross national product (GNP). It is a good measure of the wealth of our country.

If consumers stop spending, producers stop making things to be sold. The GNP gets smaller, and the country gets poorer.

If consumers start spending, producers begin making more things to be sold. The GNP gets larger, and the country gets richer.