MGEA06H3 Lecture 4: Week 4 chapter notes
3 Dec 2010
School
Department
Course
Professor
2
MGEA06H3 Full Course Notes
Verified Note
2 documents
Document Summary
Chapter 22 adding government and trade to the simple macro. Model notes fiscal policy the use of the government"s tax and spending policies. T = ty, where t is the net tax rate. N when government has budget surplus, public saving is positive; when government has budget deficit, public saving is negative. N federal government raises about same amount of tax revenue as do the provincial and municipal governments combined, but transfers a considerable amount of its revenue to the provinces. N when measuring overall contribution of government to desired aggregate expenditure, all levels of government must be included. Summary: all levels of government add directly to desired aggregate expenditure through their purchases of goods and services, g, governments also collect tax revenue and make transfer payments. Net tax revenues are denoted t and are positively related to national income. Since t does not represent any expenditure on goods and services, it is not included directly in the ae function.
