PO101 Lecture Notes - Lecture 9: Greek Drachma, Gross Domestic Product, Monetary Policy
Document Summary
Human resources: size and quality of labour power help to maximize productivity: technological development and innovation, basic social institutions: ideology (communism vs. capitalism, well-functioning legal system, decent and widely available education, general social peace. Gdp is the total value of goods produced and services provided in country in one year. When gdp goes up, economy in expansion. When gdp goes down, economy in contraction. C + i + g (x-m)= gdp. Interest rates: represent the price of money, i. e. the cost for borrowing money. Central bank: public institution in charge of printing the national currency and managing interest rates, usually semi-autonomous. Interest rates: dynamics of fluctuation, control, monetary policies (i. e. interest rates, set by central bank, fiscal policies (i. e. taxation, determined by national government, inflation/deflation. National currency: what determines the value, gold standard (fixed currency vs. floating, greece:1942 50,000 drachmai; 1944 100,000,000,000 drachmai. Monetary policy: control of the money supply by a semi-autonomous central bank which sets the interest rate.
