MGEA01H3 Lecture Notes - Lecture 7: Demand Curve, Real Interest Rate, Government Budget Balance

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA01H3
• Professor: Iris Au

Document Summary

Chapter 10 savings, investment spending and the financial system. The savings-investment spending identity (cid:120) the savings-investment identity shows that investment must equal to savings for the economy as a whole, i. e. , The savings-investment spending identity in a closed economy (cid:120) a closed economy is an economy that does not trade with foreigners, i. e. , Im = 0 (cid:120) national income identity for a closed economy is. Gdp = y = c + i + g. Total income total spending by all sectors in the economy. Note: the terms gdp and y will be used interchangeably for the remaining of the term. Snational = y c g (cid:120) national savings come from 2 sources: private savings, sprivate savings done by the households. Sprivate = [output (y) taxes (t) + transfers (tr)] consumption (c) Sprivate = y t + tr c disposable income: public savings, spublic savings by all levels of government.