ECON 1P92 Lecture Notes - Money Supply, Foreign Exchange Market, International Trade

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ECON 1P92 Full Course Notes
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ECON 1P92 Full Course Notes
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The overall price level, not individual prices. Total production in the economy, not the production by individual firms. Adjusts to changes across the whole economy. National income = national product (output of the total economy aka gdp) Total output produced is the total value of all goods and services produced. The quality of total output is measured in dollars. Nominal national income: [measured in current dollar equilibrium year prices] Nominal gdp inflation = real gdp. If price level changes over time are removed, only changes in production remain. If all resources were employed at their normal levels of utilization. Output gap- the difference between potential and actual output. Denote potential output by y* and actual by y. When actual income (output) is less than potential income. When actual income (output) exceeds potential income. Growth in potential gdp can increase future incomes. Increase in average income doesn"t mean increase for all- not all benefit.

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