Class Notes (836,321)
Canada (509,732)
Economics (1,590)
ECO209Y1 (26)
all (8)
Lecture

ECO209 - OCT 08.docx

4 Pages
55 Views
Unlock Document

Department
Economics
Course
ECO209Y1
Professor
All Professors
Semester
Fall

Description
E ECO209 OCT 08 LEC03 Slide 49 • No indirect taxes, GDP = net domestic income Slide 50 • Taxes: independent of level wealth (autonomous taxes, ex: property taxes), and dependent o Small t: marginal propensity to tax • Transfer payment: assumed to be independent of level of wealth • Recession: no change in government expenditure but level of expenditure decreases and creates a budget deficit Slide 52, 53 • Increase in G decreases the BS but not going to decrease fully by the amount of delta G Slide 54 • Structural deficit: economy is not in recession but there is a deficit o 1) spending too much o 2) level of taxation is too low Slide 55 • Evaluate at full employment output o AE shifts up  Kick starts the economy  Restoring confidence in the private sector o BS shifts down  In the short term, budget deficit increases further • Conservative economist/politician: o Large deficit creates a lack of confidence? Slide 56 Slide 57 • Relation between budget deficit and level of economic activity • Unemployment rate: up, expanding; down, contracting • 1995: decreasing in gov’t expenditure o Transfer payment went down o Revenue going up, economy expanding Slide 62 • Standard of living Case Study • Forbid gov’t from a budget deficit • Questions: o 1) borrow in order to finance a deficit, by issuing new bonds  Private sector may lose confidence  Paying back the loan + interest • Tax may go up in the future • Higher income individual pays more taxes • Those who pay taxes may not directly benefit from expenditure (ex:social program, welfare) o 2) AE is being lowered
More Less

Related notes for ECO209Y1

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit