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Econ Chapter 10, Chapter 10 (Savings and Investments (Inflow and Outflow…

- - - - GDP = C+I+G+(Im-X)
        
        C = consumer
        
        I = investment spending
        
        G = government spending
        
        Im-X = imports - exports
        
        In a closed economy
        
        1 more item...
        
        GDP = national income
  - - - saving is spending less money than you've earned
    - - governments save when they spend less than they've collected in tax revenue
        
        when spending exceeds revenue from taxes, they are dissaving
        
        this is a budget deficit
        
        When they are equal
        
        it is a balanced budget
        
        this is a budget surplus
      - S = T - G - Tr
        
        S = savings
        
        T = taxes
        
        G = spending
        
        Tr = Transfers
        
        these are income redistributions (student grants, pensions, etc)
  - - - although they have the same purchasing power, any money from national savings must be repaid with interest to the saver
      - a dollar from capital inflow is repaid with interest to the foreigner
      - NCI = (IM - E)
        
        NCI = net capital inflow
        
        IM = imports, X = exports
        
        and I = (GDP - C - G) + (IM-X)
        
        so I = (IM-X) = National Savings + NCI
  - - - open economy: savings + inflow = investments