MGEB06H3 Lecture Notes - Lecture 4: Government Budget Balance, Capital Outflow, Autarky
22 Feb 2017
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Document Summary
Psychical and human capital play an important part in determining long run economic growth. In canada human capital is largely provided by the government through public education. Physical capital, except infrastructure (transportation, communication, sewage, water and electric systems), is mostly created by private investment spending (spending by firms and households). Savings and investments spending are always equal for the economy as a whole, This is true because the gdp is equal to total spending on domestically produced final goods and services. The savings-investment spending identity in a closed economy: A closed economy is an economy that does not trade with foreigners. The equation for nations income identity in a closed economy is. Gdp = y = c + i + g. Total income total spending by all sectors in the economy. The economy can divide total income into two categories: spending and savings. Nations savings is the total amount of domestic savings generates with in the economy. ((snational).
