Class Notes (836,591)
Canada (509,862)
Economics (1,296)
ECN 204 (348)
Eric Kam (31)

Chapter 8.docx

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ECN 204
Eric Kam

Chapter 8Financial Market Demanders of loan able funds meet suppliers of loan able funds Real GDP Y C I G NX in a closed economy Y C I GY Cy output Ir interest rate GPrice of money goes up interest rate goes up and you want to borrow less therefore GDP goes downPrivate savings YTCincome taxes consumptionPublic savings TG taxesgovt spending Savings in the economy is going to be the sum of public savings and private savings National Savings private savingpublic saving YTCTGYCG real GDPprivate spending public spendingNational Income Accounting Identity YCIGNX Closed Economy Case YCIG solve for I IYCGYTCTG Savinginvestment in a closed economySavings is going to equal investments savingsinvestmentIS curve the goods market equilibrium investmentssavingsBudget SurplusTtax revenueGgovt spending this is public savingBudget Deficit Ggovt spendingTtax revenue this is a negative public saving Interest rate is the return to
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