Textbook Notes (368,245)
Canada (161,733)
Economics (359)
ECON 102 (143)
Ying Kong (6)
Chapter 22

Chapter 22.docx

11 Pages
81 Views
Unlock Document

Department
Economics
Course
ECON 102
Professor
Ying Kong
Semester
Winter

Description
TEXTBOOK NOTES 2/21/2013 1:51:00 PM INTRODUCING GOVERNMENT - a governments fiscal policy is defined by its plans for taxes and spending Government Purchases - government purchases are apart of aggregate desired expenditure because they add directly to the economy’s demand - transfer payments (welfare & employment insurance) add to the desired aggregate expenditure, but indirectly  increases household disposable income, increases household consumption, increase in aggregate expenditure - now we assume that government purchases are autonomous to GDP Net Tax Revenues - taxes reduce household income in relation to national income - transfer payments increase household income in relation to national income - Net taxes is the total tax revenue received by the government minus the total transfer payments made by the government - because transfer payments are smaller than tax revenue, net tax is positive - net tax revenues vary with the national income (GDP) but tax rate remains autonomous - GOVERNMENT NET TAX REVENUES: T = tY  t = net tax rate / marginal propensity to tax o the net tax rate is the increase in net tax revenue generated by an increase in national income by $1 The Budget Balance - the budget balance is difference between total government revenue and total government expenditure  equal to T - G - budget surplus  T>G - budget deficit  T eq (45° line)  desired consumption is less than national income  inventories increase  firms produce less  national income decreases CHANGES IN EQUILIBRIUM NATIONAL INCOME The Multiplier with Taxes and Imports - the presence of imports a
More Less

Related notes for ECON 102

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit