10/2/17 Macro Lecture Test Questions:
Households are the creditors, businesses are the debtors
Households save more than they borrow, business borrow more than they save
Banks are the intermediary between households and those who take loans
70% of all spending is consumption, government is 2nd, investment is 3rd, we are consumption based
economy!
Notes:
Businesses take borrowed money and directly put it into the product market at Investments (I)
Investment (I) in the us economy is spending by business firms for capital goods
Buying stock is not an investment, it is an investment
GDP = C + I + G
Leakages
Injections
Savings > Investments
Taxes
< Government Spending
Imports (M) > Exports (X)
Govt spending is more than taxes = budget deficit
Leakages of $$$:
Savings (S)
Taxes (T)
Injections of $$$:
Investments (I)
Government Spending (G)