Economic feedback

Economic feedback refers to the way changes in one part of the economy can influence other areas. For example, if consumers start spending more money, businesses may increase production and hire more workers, leading to higher employment and income. This, in turn, can boost consumer spending even further, creating a cycle of growth. Conversely, if spending decreases, businesses may cut back on production and lay off workers, causing income and spending to drop even more. Essentially, economic feedback illustrates how interconnected the various components of an economy are and how they respond to changes.