12 - (trade via imports and exports) Disposable income =...

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Assume individual are homogenous Yd = disposable income = Y – T + Tr T = Taxes Y = Income Tr = Transfers Yd = consumption + private savings (either save or consume) - Spr = Private savings = the portion of households’ income that is not used for consumption - Spr = Y – T + Tr – C o Personal Savings Rate = Spr / Yd Saving rate goes up during the recession The difference between government sending and tax collection is public savings Total national savings = sum of household savings + sum of government savings National Savings = investments + Net Exports )since Y = C + I + G + NX - money must go to the firms, or must go to our relationship with our countries
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Unformatted text preview: (trade via imports and exports) Disposable income = Income – Taxes + transfers Private Savings = Income – Taxes + transfers – Consumption Public Savings = Taxes – Government spending – transfers Budget debt = Deficit + Budget debt in previous year x (1 + interest rate) Budget deficit = - public saving Budget deficit = Government spending – Taxes Private saving = Income – Taxes – consumption Taxes = Government spending + public saving National saving = Income – Consumption – Government spending...
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This note was uploaded on 10/23/2011 for the course ECON 002 taught by Professor Eudey during the Fall '08 term at UPenn.

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