ECON 105 Chapter Notes - Chapter 22: Disposable And Discretionary Income, Autonomous Consumption, Consumption Function

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Seong- Jun Choi

Document Summary

Chapter 22: adding government and trade to the. Fiscal policy: the use of the government"s tax and spending policies to achieve government objectives. Government purchases: hiring public servants, buys office supplies, purchase fuel for canadian forces. Influences national income: government"s is defined to its plans for taxes and spending, directly adds to demand for economy"s current output of goods and services, doesn"t automatically change when gdp changes. Transfer payments: transfer of wealth: when individuals spend the transfer of wealth, it contributes to the consumption expenditure. Taxes reduce hh"s yd (disposable income) relative to y (national income) Transfer payments yd (disposable income) relative to y (national income) As y , t & transfer payments . Budget balance: the difference between total government revenue and total government expenditure: t g. When t > g: budget surplus: any excess f current revenue over current expenditure. When t < g: budget deficit: any shortfall of current revenue below current expenditure, government must borrow money.