chapter  14
23 Pages

The Flow of Business Funds, Consumption and Investment

THE GROSS PRODUCT of the business sector in the United States normally accounts for about 90 per cent of the gross national product. This implies that most of the total spending stream is directed towards private business firms for the purchase of their output, and that most factor income originates in the business sector. Since business firms control the disposal of a relatively large part of the total flow of funds, their operations in this matter, as in others, come to possess a special importance for the economy. What they do with their funds-whether, for instance, they direct them so that they become a part of the income stream, or not-is likely thus to be a decisive factor in establishing the level of both consumer and business investment expenditures.