Term
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Definition
Total Tax revenue minus transfer payments, denotes T.
T=tY
t- net tax rate or marginal propensity to tax
Net tax revenues are positively related to national income. |
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Term
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Definition
| The difference between the government revenues and its expenditures. If Revenues> expenditures, its a budget surplus |
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Term
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Definition
| Public saving is the difference between the government's tax revenues and its expenditures, hence its equal to the budget surplus. |
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Term
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Definition
| Yd= Y - T, and the desired consumption depends on Yd |
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Term
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Definition
As consumption rised imports will also increase. Because consumption rises with national income, we get a positive relationship between imports and national income.
IM=mY
m - is the marginal propensity to import, the amount by which the desired imports rise when national income rises by 1$. NX = X -mY |
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Term
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Definition
| Exports are autonomous with respect to Y. Hence NX= X - mY |
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Term
| change in slope of net export function |
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Definition
| Anything affecting the proportion on income that canadian consumers wish to spend on imports will change the slope on the net export function |
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Term
| Effect of a rise of canadian price relative to foreign prices |
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Definition
Exports of Canadian products will decrease. Downward shift of the X curve.
Imports of foreign products will go up.
The IM curve will rotate up.
The next exports function shifts downward and becomes steeper. |
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Term
| Effect of canadian dollar depreciating |
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Definition
Canadian goods will be cheaper for foreigners. Canadian exports rise.
Canadians find it more expensive to buy imported products, imports fall. There is a downward rotation of the IM curve.
The net exports function shifts up and becomes flatter. |
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Term
| Relationship between consumption and national income in the presence of taxes |
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Definition
T= 0.1 Y
Yd= Y -T = 0.9 Y
C= 30 + (0.8) Yd
= 30 + (0.8) (0.9) Y
The presence of taxes, the MPC to consume out of national income is less than the MPC to consume out of disposable income. |
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Term
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Definition
AE= C+I+G+(X -IM)
= a+b (1-t)Y + I + G + (X - mY)
= [ a + I + G + X ] + [ b(1- t) -m]Y Autonomous exp - induced expenditure |
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