ECON 203 Lecture Notes - Lecture 7: Disposable And Discretionary Income, Consumption Function, Unemployment Benefits
21 Feb 2020
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Chap 7: the government sector: government in canada: The total government sector in canada includes the federal, provincial, and municipal governments, as well as hospitals: government expenditure and taxes. A basic government budget has two components: a plan for government expenditures on goods and services, g, a net tax rate on income, t, set to generate revenue to finance expenditure. When added to the definition of autonomous expenditure, a is expanded to include government expenditure g: government expenditure (g): government spending on currently produced goods and services. We illustrate autonomous government expenditure in the same way we did with other autonomous expenditures, using a simple equation. Net taxes reduce disposable income the amount available to households for spending or saving relative to national income. If yd is disposable income, y national income and output, and nt net taxes: disposable income (yd)=national income minus net tax revenue, yd=y nt, the consumption function is:
