Classical Theory Flashcards
1
Q
According to Say’s Law, in the aggregate
A
The production of output will generate exactly enough income to purchase what has been produced
2
Q
Net Taxes are
A
total tax revenues - transfer payments
3
Q
When total spending equals total output
A
Savings + taxes = investment + government purchases
4
Q
What is the relationship between the government’s budget deficit and its tax revenue
A
Budget deficit= government spending - tax revenue
5
Q
In the classical model, the loanable funds market will clear when saving
A
= investment + government purchases - net taxes
