ECON 2020U Study Guide - Final Guide: Nominal Interest Rate, Loanable Funds, Real Interest Rate

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28 Feb 2015

Document Summary

Chapter 10 saving, investment spending, and the financial system. Savings investment spending identity: savings and investment spending are always equal for the economy as a whole. Budget surplus: excess of tax revenue over government spending. Budget deficit: excess of government spending over tax revenue. Budget balance: the difference between tax revenue and government spending. National savings: the sum of private savings and the budget balance (the total amount of savings generated within the economy). It"s important to stay clear about the different kinds of capital (as explained in the previous chapter): physical capital consists of manufactured resources, such as buildings and machines. Human capital is the improvement in the labor force generated by education and knowledge: financial capital is funds from savings that are available for investment spending. Net capital inflow is the total flow of funds into a country minus the total flow of funds out of a country.

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