BBG 101 Lecture Notes - Lecture 11: Xm Satellite Radio, Aggregate Demand, Fiscal Policy
Document Summary
The government budget is the difference between government revenue and government spending. In our simplified model, we write these as t and g respectively. Fiscal policy: the setting of the level of govt spending and taxation by govt policymakers. Expansionary fiscal policy: an increase in g and/or decrease in t, shifts ad right. Contractionary fiscal policy: a decrease in g and/or increase in t, shifts ad left. Marginal propensity to consume (mpc): the fraction of extra income that households consume rather than save the external sector. Australians participate in the australian economy, and in economies around the world. For example, we may buy goods made overseas, services provided overseas, or shares in. An open economy interacts with other countries in three ways: it buys and sells goods and services in world product markets, it buys and sells assets in world asset markets, it makes/receives transfer payments to/from other countries.