ECONOMICS 3012
Jeremiah Allen’s
Macroeconomics Flow Chart
Y
Transfer
Payments
Total
Taxes
Y–T
Governments
Resource
Owners
HouseHolds
S
Financial
Sector
G
I
C
Y
Spending by
Canadians
C+I+G–Q
Firms
X
Y
or
GDP
AE
or
Z
Q
Foreign
Sector
You can see from the chart that AE  C + I + G + NX , where NX  (X – Q)
AE  Y (This was explained in class)
T  Net Taxes  (Total Taxes – Transfer Payments)
YD  (Y–T)  Disposable Income
S  Personal Savings  Disposable Income not spent  (Y–T) – C
From this we get, by the definition of Savings, that Y  C + S + T