Econ Ch.9 Study help

Econ Ch.9 Study help - Y = C S T-So AE = C I G Budget...

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Chapter nine: Government Purchases of goods and services (G) Net Taxes (T): Taxes paid by firms and households to the government minus transfer payments made to households by the government. Disposable Income (Yd): Total income minus net taxes - Yd = Y – T - Yd = C + S - Because disposable income is aggregate income (Y) minus net taxes (T), we can write: Y – T = C + S - By adding (T) to both sides:
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Unformatted text preview: Y = C + S + T-So : AE = C + I + G Budget Deficit: Difference b/w what Government spends (G) and what it collects in Taxes (T) in a given period.-Budget Deficit = G – T-If G exceeds T, the gov’t must borrow from the public by selling bonds and bills. Now we can write the Consumption Function as: -C = a + B ( Y – T ) Equilibrium Condition: AE = Y...
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