ECON-002 Lecture Notes - Government Budget Balance, Loanable Funds, Financial Capital
Document Summary
According to the savings investment spending identity, savings and investment spending are always equal for the economy as a whole. I = snational = sgovernment(budget balance) + sprivate + net exports. National savings = government savings + private savings. I = gdp c g x + im. Budget surplus = tax revenue - government spending. Budget deficit = tax revenue - government spending. The budget balance = tax revenue - government spending. Government borrowing is the total amount of funds borrowed by federal, state, and local governments in the financial markets. National savings = private savings + government savings/budget balance. Is the total amount of savings generated within the economy. Consists of manufactured resources, such as buildings and machines. Is the improvement in the labor force generated by education and knowledge. Is funds from savings that are available for investment spending. Net capital inflow = inflow of funds - outflow of funds.