The government - rest of the world and the financial markets, Macroeconomics

Assignment Help:

The Government, Rest of the World and the financial markets

  • total expenditure of government can be divided into two parts: transfers to private sector and consumption.
  • Government expenditure is total expenditure by government on services and goods. Note that salary paid to an officer in the army is included in government expenditure whereas pension to the same officer is part of the transfers. We signify government expenditure by G.
  • Government revenue is from taxes paid by the private sector. Because part of the taxes is returned through transfers, government has NT available for consumption.
  • We say that government has a balanced budget if G = NT. We also describe government savings as SG = NT - G.
  • The total value of all exports to rest of the world is denoted by X, Whereas the total value of all imports from rest of the world is denoted by Im. If Im > X then value of all services and goods received from rest of the world is larger than value of services and goods that we send to them. Difference, SR = Im - X is rest of the world savings and this is also the amount we borrow from rest of the world that should ultimately be paid back by exporting more than we import.
  • Firms borrow money from financial markets in order to finance investments signified by I. Investments are financed by private sector savings, government savings and rest of the world savings, I = SH + SG + SR. Please Note that SH , SG and/or SRcan be negative.

Related Discussions:- The government - rest of the world and the financial markets

Real per capita gdp levels, If two countries had the same initial level of ...

If two countries had the same initial level of real GDP per capita, and Country A grows at 2.8 percent, while Country B grows at 3.5 percent, how will their real per capita GDP lev

Demand for money and gdp, Q. Demand for money and GDP? The demand for m...

Q. Demand for money and GDP? The demand for money also relies on the GDP as GDP is closely associated to national income. If you choose to hold a fixed proportion of your wealt

Online homework, I sent to you an email for the online homework the deadlin...

I sent to you an email for the online homework the deadline through 10 hours all questions are about 10 please do it in full score

The supply and demand for oil in the us, Over the last year both the supply...

Over the last year both the supply and demand for oil in the US has gone up. What might have caused this and what happened to the price and quantity of oil?

Inflation, What are the effects of neutral inflation

What are the effects of neutral inflation

Define elasticity of supply, Define elasticity of supply. What factors infl...

Define elasticity of supply. What factors influence Elasticity of Supply? There is only one type of identifiable elasticity of supply measuring the responsiveness of market sup

Why gdp is determined only by aggregate demand, Q. Why GDP is determined on...

Q. Why GDP is determined only by aggregate demand? Note that we haven't said anything about the aggregate supply so far. In order to justify why GDP is determined only by aggre

Describe classical model of macroeconomics, Q. Describe classical model of ...

Q. Describe classical model of macroeconomics? Though we use the term ‘the classical model' as if there were just one classical model, this isn't quite true. For all the models

Trade, What is the difference between heckscher_olin theory and comparative...

What is the difference between heckscher_olin theory and comparative theory

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd