ECO102H1 Lecture Notes - Lecture 4: Government Spending, Autarky, Human Capital

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beigetortoise333

4 Feb 2019

School

UTSG

Department

Economics

Course

ECO102H1

Professor

Ho Cheung (Michael) Ho

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ECO102H1 Lecture Notes - Lecture 3: Fallacy, Free Trade, Physical Capital

ECO102H1 Lecture Notes - Lecture 4: Government Spending, Autarky, Human Capital

ECO102H1 Lecture 5: Chapter 10 Part 2

Document Summary

Increase in human capital and physical capital. The savings-investment spending identity dictates that savings and investment are always equal for the economy as a whole. Total amount of domestic savings generated within an economy. Difference between tax revenue and government spending on goods and services udget balance (spublic) b. (t-tr)= net tax renevue - government spending. Budget positive, gaining more from tax then spending on society. Budget negative, gaining less money from tax then spending on society. Saving and investment in a an open economy. C g = + n (gdp. Savings is equal to national savings plus capital inflow, as saw in equation (3) There is a market for loans and stocks and bonds. Hypothetical market that illustrates the market outcome of the demand for funds generated by borrowers and the supply of funds provided by lenders. The price is the interest rate = i. Slopes downwards: the lower the interest rate, the greater the loanable funds demanded.

Related Questions

1. The government saves when it:

A) Has a balanced budget

B) Has a budget deficit.

C) Has a budget surplus.

D) Borrows by selling bonds.

2. In an open economy, total investment spending is equal to:

A) National savings plus the net capital inflow

B) Private savings plus national savings plus net capital inflow.

C) Private savings plus net capital inflow.

D) National savings minus private savings minus net capital inflow.

3. Net capital inflow is equal to:

A) GDP plus exports minus imports.

B) The growth in capital stock minus investment spending.

C) Foreign direct investment.

D) The total inflow of foreign funds minus the total outflow of domestic funds.

chocolateweasel157

What are the relationships between current account deficit (CAD), budget deficit and national debt, knowing that the US national debt is currently at $21.13 trillion? Note the following GDP equation and identities: I = Sp + (T - G) + (Im - Ex). I=Investment; Sp=private savings; T-G = public savings, tax revenue minus government spending, which could be a budget deficit if G>T; Im-Ex = imports minus exports, which could lead to current account deficit if Im>Ex leading to NCI (net capital inflow).

violetrat23

I'm a bit confused about this question, help would be much appreciated.

The following macroeconomics equation describes an accounting identity (i.e. fact) relating national savings (S) to total investment (I), government spending (G), tax revenue (T), exports (X), and imports (M):

(S-I)= (G-T)+(X-M)

Assume a country has a net-zer trade balance (X-M=0)

A) Suppose a country experiences a government budget deficit, (G>T). What can we infer about the relationship between national savings (S) or investment (I)? Explain which is greater.

B) Now, suppose a country experiences a government budget surplus (G<T). Which is greater, national (S) or investment (I)? Explain.

carminedolphin386

ECO102H1 Lecture Notes - Lecture 4: Government Spending, Autarky, Human Capital

ECO102H1 Lecture Notes - Lecture 3: Fallacy, Free Trade, Physical Capital

ECO102H1 Lecture Notes - Lecture 4: Government Spending, Autarky, Human Capital

ECO102H1 Lecture 5: Chapter 10 Part 2

Document Summary

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