Handout 3 Flashcards
Consumption (C)
All the expenditures by the household sector
Investment (I)
All the expenditures by the business sector
Government Purchases (G)
All the expenditures by the government sector, which do not include its transfer payments
Transfer Payments
Government distributions of money
International Sector (X and M)
A country’s exports and imports
Net Exports (NX)
A country’s exports minus its imports
Asset
Property that has value and is expected to retain value
Net Factor Payments (NFP)
The payments received by the domestic owners of foreign-situated assets for those assets’ services, minus the payments to the foreign owners of assets that have delivered services domestically
Saving (S)
The portion of a country’s national income that is neither consumed by households (C) nor directed to government purchases (G) during the period
Dissaving
The sale of an asset
Closed Economy
Operates independently of any other economy
Saving Schedule
Illustrates the positiev relationship between r and Sd
Investment Schedule
Illustrates negative relationship between r and Id
World Interest Rate (rw)
If equal to ro, Sd would exceed Id, making too few ideas for capital creation that would be expected to make the return that those delivering the saving are expecting
Open Economy
Indicates a country that trades with other countries
