ECON 105 Lecture Notes - Lecture 7: Loanable Funds, Real Interest Rate, Demand Curve

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Gulriz Barkin

Document Summary

Matching up savings and investment spending: human capital: knowledge, provided by govt through public education, physical capital: created through private investment spending (i) that is spent by firms rather than by govt. Saving- investment spending identity in closed economy: there is no export or import, so they are 0. I = gdp - c - g: as individuals you can split income into spending and saving. > same applies to the economy , it can split the income into spending and saving: consumption spending come from. > government (public sector consumption, g: total saving, national saving (sgovernment ) also comes from household and government. =sprivate + sgovernment: national savings= private saving+ public saving. In a closed economy, investment spending is financed by private saving and government saving. > net capital inflow= - net foreign investment or net foreign investment= - net capital inflow: nfi=x-im=net export, gdp= c+i+g+(x-im)