ECON 2002.01 Lecture Notes - Lecture 12: Government Spending, Municipal Bond, Business Cycle
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ECON 2002.01 Full Course Notes
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Frictionless economy = d & s for labor and wage in equilibrium. Efficiency wage: pay workers a little more than necessary. Union (cartel: everyone can organize a strike people won"t go to work. A developed economy leads to: money exchange as opposed to trading. Ex: loans, firms produce and expect to gain profit in the future. Mutual funds: ex: fidelity, manager pulls our money together and manages it to choose what to buy. Y = c + i + g + nx. Consumers + investments + government + net exports. Government spending: money comes from taxes, = c + i t + t g + nx. I = y c g nx. = y c t + t g nx. T g = government balance budget / government savings. T g > 0 budget surplus. T g < 0 budget deficit. National savings = private savings + government savings.