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The market value of all goods and services produced within a country in a given period of time. It can be measured as all the EXPENDITURES to buy the goods and services produced. It can also be measured as all the INCOME earned from producing the goods and services. Since every dollar spent is someones income, the two measures give the same result.
Expenditures
Expenditures are purchases of goods and services. Expenditures are
Consumption (C) Investment (I) Government spending (on goods and services) (G) Net Exports (X-M) Exports (X) Imports (M)
Government
Government spending: Goods and services (G)
Roads, health care, education, helicopters, police officers salaries, judges salaries.
Government revenue:
Taxes (Income from Crown corporations) (Tariffs) Less Transfers to persons (part of net taxes) GST rebates, unemployment insurance, pensions, subsidies Interest on the debt (substantial) NOTE: The govt is not buying services, so transfers are not an expenditure.
Surplus
G + Tr < Tx G < Tx Tr G < NT
Revenue
Taxes (Tx)
Deficit
G + Tr > Tx G > Tx Tr G > NT
Net Taxes
Tx Tr = NT
Savings by governments
NT G = savings
Savings of foreigners
M X = foreign borrowing
STOCKS
Wealth: All the goods a person owns. Wealth is the sum of past net saving. Debt: the sum of all past deficits less all past surpluses Capital: All the investment goods owned. Capital is the sum of past net investment