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

What is bowed-out shape, Why does a production possibilities frontier with ...

Why does a production possibilities frontier with increasing opportunity costs have a bowed-out shape?   The curve is bowed-out because some resources are better suited for the

Explain short and long term interest rate in money demand, Explain about th...

Explain about the short term and long term interest rate in money demand. The Opportunity Cost of Holding Money Demand: a. Short-term interest rates Rates onto assets whi

Purchase an annuity, Suppose you have $10,000 and wish to purchase an annui...

Suppose you have $10,000 and wish to purchase an annuity that pays you a fixed dollar amount every month. How much would you receive each month if the annuity rate is 1% and you in

Business cycletories, list of all theories of business cycle theories

list of all theories of business cycle theories

Example of introducing the government- accounting system, Example of Introd...

Example of Introducing the Government- ACCOUNTING SYSTEM   So far there was no government in any of our stylized economies. Let us now introduce it. To begin with, our governmen

About assignment, i have assignment due within less than 24 hours if i sub...

i have assignment due within less than 24 hours if i submit assignment can i get it back before 24 hours?

A history of canadian economy, i have an assignment i need it to be done by...

i have an assignment i need it to be done by thursday march the 10th before midnight

Artificial intelligence and neural networks, Problem >> Explore the rel...

Problem >> Explore the relationship between Artificial intelligence and Neural networks. The systems which use this type of intelligence are known as artificial intelligent

Properties of indifference curve, Properties of indifference curve:   P...

Properties of indifference curve:   Property I: Higher indifference curve gives higher utility.      Explanation: Since all goods are non-satiated, larger consumpti

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