"where does the new money come from?"
Cash on the sidelines, external sources of investment, and leverage.
Does the money supply grow at a much faster rate than inflation?
Price * Real Growth = Money Supply * Velocity of Money
Money supply may grow but if the velocity of money changing hands is lower then there won't be inflation.
Does external investment from other countries have a large bearing on historical growth?
GDP = Total Income = Total Expenditure
GDP = Y = C+I+G+NX
= Consumption + Invesment + Gov Spending + Net exports
Depending on the country the components of GDP will change. For emerging countries its Exports and Investment, for the US its been consumption, government spending, and investment. There were times in our history that investment was a very high portion.
This post was edited on 7/11 at 10:57 am