ECO100Y5 Chapter Notes - Chapter 10: Government Budget Balance, Nominal Interest Rate, Loanable Funds

• School: UTM
• Department: Economics
• Course: ECO100Y5
• Professor: Michael H O

Document Summary

Macroeconomics chapter 10: savings, investment spending, and the financial system. States that savings and investment spending are always equal for the economy as a whole. Recall: gdp = c + i + g + (x im) where c = consumer spending, i = investment spending, G = government purchases of goods and services, and x im = value of exports value of imports. Gdp = (c + g) + snational or snational = gdp c g. I = snational: savings undertaken by households = sprivate disposable income consumer spending, where gdp represents income, and tr = transfers from the govt. Sprivate = (gdp t + tr) c: government spending = public savings (spublic) or budget balance (difference between a budget surplus and deficit) Budget balance = (t tr) g = spublic: national savings are a sum of private and public savings. In an open economy: net foreign investment (nfi) is net imports and exports.