Reply To: Definition of GDP


Because business-to-business sales are a multiple of consumer-to-business sales, the bulk of economic activity in the economy is not included in GDP. Consumption is not 70% of the economy (it is 70% of GDP) and therefore, stimulating consumption via fiscal and monetary policy is unlikely to bring an economy out of depression or lead to economic growth. Macroeconomic problems are likely caused by production aimed at satisfying business-to-business sales and not production to satisfy consumer-to-business sales.