ECON 102 Lecture 4: ECON 102 Lecture 4 National Income and Expenditures Part II (G and NX)

• School: UBC
• Department: Economics
• Course: ECON 102
• Professor: Robert Gateman

Document Summary

Econ 102 lecture 4 national income and expenditures part ii (g and nx: government, government purchases i. ii. iii. iv. v. Fiscal policy = use of gt to affect ye. G effects ae directly: t affects ae indirectly through yd and c. Gov"t purchases = government spending - transfer payments (tp) + government investment. G is usually a function of elections, not y g = g: net tax revenues i. ii. iii. iv. v. Yd = y - (net taxes), where net taxes = t - tp. Usually, we just call net taxes, taxes and define: yd = y - t. In most cases, t are a function of y t = f(y) T = ty, where the net tax rate = t = mpt = mrt. T includes sales, property tax: budget function, g budget = t - g = g revenues - g purchases, g budget: f. Budget deficit = t - g < 0.