ECON102 Lecture : Chapter 8 Notes FULL lecture notes for Chapter 8

• School: University of Waterloo
• Department: Economics
• Course: ECON102
• Professor: Angela Trimarchi

Document Summary

= c + i + g + (x - m) Closed economy: one that does not trade and doesn"t have external links with the rest of the world. We can rearrange the above equation to solve for i: We can subtract and add government taxes, t, to the right hand side of the above equation: I = y c t g + t. = (y c t) + (t g) Therefore, the two main terms are the following: (y - c - t) = private saving (t - g) = public saving. Recall: (t g) = public saving / government budget. If t - g > 0, then there is a budget surplus and public saving. If: t g < 0, then there is a budget deficit and public dis-saving. Y c g is also equal to national savings, symbol for national savings is s.