ECON 1P92 Lecture Notes - Monetary Policy, Money Supply, Black Market
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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. Adjustments to changes across the whole economy. Gross domestic product (gdp)- total output produced is the total value of all goods and services produced. The quantity of total output is measured in dollars. Nominal national income: (current dollar)- the dollar value of total output. Real gdp- measures income at base-period prices (constant dollars) If price level changes over time are removed. Changes in real gdp- measures changes in production. What the economy could produce if all resources were employed at their normal levels of utilization. Output gap- the difference between potential and actual output. Denote potential output y* and actual output by y. Recessionary gap- when actual income (output) is less than potential income. Inflationary gap- when actual income (output) exceeds potential income. When gdp is below potential- output and incomes are lost, can never recover these losses.