ECON 295 Chapter Notes - Chapter 22: Ceteris Paribus, United States Treasury Security, Consumption Function

• School: McGill University
• Department: Economics
• Course: ECON 295
• Professor: Paul Dickinson

Document Summary

Chapter 22: adding government and trade to the simple macro model. How presence of gvmt affects simple model: (1) all lvls of gvmt add directly to desired ae through their purchases of good (g) = autonomous expenditure. (2) gvmts also collect tax. Net tax revenues (t) are +vely related to national income. Since t does not represent any expenditure on gods & serivs, it is not included directly in ae fct. T will enter ae fct indirectly through its effect on yd & consumption. Gvmt purchases of goods & servs (g) are part of desired aggregate expenditure (= autonomous; other things them; s in lvl of gdp won"t significantly; but will transfer payments: not including transfer payments. Including all levels of government federal, provincial, territorial & municipal. Net tax revenues (t) (cid:2176)=(cid:2176)(cid:2197)(cid:2202)(cid:2183)(cid:2194) (cid:2176)(cid:2183)(cid:2206) (cid:2174)(cid:2187)(cid:2204)(cid:2187)(cid:2196)(cid:2203)(cid:2187) (cid:2174)(cid:2187)(cid:2185)(cid:2187)(cid:2191)(cid:2204)(cid:2187)(cid:2186) (cid:2184)(cid:2207) (cid:2204)(cid:2195)(cid:2202) (cid:2176)(cid:2197)(cid:2202)(cid:2183)(cid:2194) (cid:2176)(cid:2200)(cid:2183)(cid:2196)(cid:2201)(cid:2188)(cid:2187)(cid:2200) (cid:2183)(cid:2207)(cid:2195)(cid:2187)(cid:2196)(cid:2202)(cid:2201) (cid:2195)(cid:2183)(cid:2186)(cid:2187) (cid:2184)(cid:2207) (cid:2204)(cid:2195)(cid:2202) Net taxes (t) are total tax revenues net of transfer payments (t +vely related to national income)