Expenditure cascades
Expenditure cascades happen when people spend money on things, and then the people who receive that money spend it on other things, which then causes even more people to spend money, and so on. It's like when you and your friends play a game of passing a ball around - you pass it to one friend, who passes it to another friend, and so on.
For example, let's say your dad buys a new car. The money he spends goes to the car dealership, who then uses that money to pay the people who work there. Those people then spend that money on other things, like groceries, clothes, or toys. The people who receive that money will then spend it on even more things. This creates a chain reaction, where one person's spending leads to more spending by other people.
Expenditure cascades can be really good for the economy because they help create jobs and increase the amount of money being spent. But they can also cause problems. If people start spending too much and borrowing too much money, it can lead to things like high levels of debt, inflation, or even a recession. So while it's important to spend money and support the economy, it's also important to be responsible with our spending and make sure we don't get in over our heads.
For example, let's say your dad buys a new car. The money he spends goes to the car dealership, who then uses that money to pay the people who work there. Those people then spend that money on other things, like groceries, clothes, or toys. The people who receive that money will then spend it on even more things. This creates a chain reaction, where one person's spending leads to more spending by other people.
Expenditure cascades can be really good for the economy because they help create jobs and increase the amount of money being spent. But they can also cause problems. If people start spending too much and borrowing too much money, it can lead to things like high levels of debt, inflation, or even a recession. So while it's important to spend money and support the economy, it's also important to be responsible with our spending and make sure we don't get in over our heads.