宏观经济学学习笔记【6】-saving and investment in the national income accoun

For a simplification, assuming a closed economy is easy and it can apply the world economy, thus we can write Y=C+I+G. To expound financial markets, we obtain Y-C-G=I. The left side of this equation(Y-C-G) is called NATIONAL SAVING, or just SAVING(S), which denotes the total income in the economy that remains after paying for consumption and government purchases. Therefore, 

Y - C - G = S = I

Let T denote the amount that the government collects from households in taxes minus the amount it pays back to households in the form of transfer payments.

S = ( Y - T - C ) + ( T - G )

Private saving (Y - T - C) is the income that households have left after paying for taxes and consumption. 

Public saving (T-G) is the amount of tax revenue that the government has left after paying for its spending. 

If T>G, the government runs a budget surplus. Conversely, it runs a budget deficit.

For the economy as a whole, saving must be equal to investment. The mechanism coordinating them is the financial system.