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P. 31. Modelling the economy, p. 439.
a. current spending on goods and services
b. investment spending
c. transfer payments (pensions,
unemployment, payment for nothing) not an
Equal changes in both spending and tax will not have the
Marginal rate of taxation (MRT)
Equilibrium in the closed economy I+G=S+T
3. Exports (X)
4. Imports (M)
determined by the level of Y
Marginal propensity to import (MPM)
1. Increase in G or I - balance of payments
2. Increase in X - balance of payments improves.
3. Feedback effects occur when nations trade
can influence world trade.