ECON 1P92 Lecture : chapter 22

• School: Brock University
• Department: Economics
• Course: ECON 1P92
• Professor: Marilyn Cottrell

Document Summary

Chapter 22: adding government and trade to the simple macro model. Government is an important variable in the economy. G is a part of desired ae (ae = c + i + g + x im) Only a flow of funds from government to house hold. Tax rates are autonomous poly variables, but revenues vary with gdp : Where t = marginal propensity to tax. Note: t includes all taxes, so when y rises by , tax revenues rise by t x . G is autonomous: beyond the system, not dependent. As y increases, t rises: tax revenues rise, transfers payments fall. G includes all levels of government in desired ae in public saving. [ in canada combined purchases of provincial and municipal governments is larger than federal government. ] Autonomous wrt canadian national income: dependent more on foreign income. Rise as national income increases: not autonomous. Change in imports caused by a change in gdp.