ECON 110 Chapter Notes - Chapter 22: Autonomous Consumption
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ECON 110 Full Course Notes
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G is autonomous to gdp, depends on government policy decisions. Net taxes (t): total tax revenue received transfer payments made. Net tax rate (t = ty) where t is the net tax rate or the marginal propensity to tax (do not associate with specific tax) Budget balance = t g (public saving when positive) Net exports = nx = x = my. A rise in canadian prices relative to those in other countries reduces canadian net exports (x shifts down, im rotates up) With taxes, yd (disposable) is less than y (national) Imports = im = my where m is the marginal propensity to import (amount desired imports rise when income rises by ) C = autonomous consumption + (marginal propensity to consume)(1-tax rate)(national income) Ae = c + i + g (x im) Ae = a + b(1 t)y + i + g + (x = my)