Professional Documents
Culture Documents
Lecture 5 Saving, Investment and The Financial System
Lecture 5 Saving, Investment and The Financial System
26
Saving, Investment, and the
Financial System
Economics
PRINCIPLES OF
N. Gregory Mankiw
Public saving
= Tax revenue less government spending
=T–G
Budget deficit
= a shortfall of tax revenue from govt spending
= G–T
= – (public saving)
14
ACTIVE LEARNING 1
Answer
Given:
Y = 10.0, C = 6.5, G = 2.0, G – T = 0.3
60 80 Loanable Funds
($billions)
Demand
50 80 Loanable Funds
($billions)
60 Loanable Funds
($billions)
60 70 Loanable Funds
($billions)
60 70 Loanable Funds
($billions)
6%
…which increases
5%
the eq’m interest rate
and decreases the
eq’m quantity of L.F.
D1
50 60 Loanable Funds
($billions)
30
CHAPTER SUMMARY