ECON 105 Lecture Notes - Financial Intermediary, Efficient-Market Hypothesis, Financial Market

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Gulriz Barkin

Document Summary

Two of the essential ingredients in growth are increases in human capital and physical capital. Human capital is largely provided by government through public education. But physical capital, with the exception of infrastructure, is mainly created through private investment spending (i)- that is spending by firms rather than by the government. According to the savings investment spending identity, savings and investment spending are always equal for the economy as a whole. The budget surplus is the difference between tax revenue and government spending when tax revenue exceeds government spending. The budget deficit is the difference between tax revenue and government spending when government spending exceeds tax revenue. The budget balance is the difference between tax revenue and government spending. National savings, the sum of private savings plus the budget balance, is the total amount of savings generated within the economy. Capital inflow is the net inflow of funds into a country. The savings-investment identity in a closed economy (no trade):