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ECON 1102 (24)
Lecture

First couple of classes notes

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Department
Economics
Course
ECON 1102
Professor
Liza Bristow
Semester
Winter

Description
Macroeconomics Macroeconomics policies Monetary: Interest rates. Goes two ways going to get more money off of interest and borrowing money is going to be harder. Fiscal: government budgets, expenditure, revenue. ExpenditureRevenue= deficit Structural: more capital goods than consumer goods is a structural change. Output of market value; Final goods and services= When selling a car at the price which is market value it includes the value of all the goods that went into the making of the car. GDP= geographic limitations GNP= ownership of resources Capital good: a good that will create more value in the future ex. Machine. They are included in GDP calculations. Second hand goods excluded from GDP. When selling a house the value of house isn’t included because it isn’t new but the commission is included When selling stocks and shares the price of stocks and shares are not included but the commission gained is included because it is a service and something is being created. Second Note Not included in GDP: illegal activities, underground economy and barter economy (dentist does teeth for his accountant and is not recorded), house hold production (repairing your own home) When people cut down trees the value is only then become evident to the economy, no value is seen in the trees or natural resources until they are used up Natural disasters bring a increase to GDP Income approach of finding GDP: land: farm income, rental income Labour: wages and salaries value of fringe benefits Capital: profit, dividends, interest, investment income minus income received from abroad minus interest paid on public debt Find in-between value of expenditure approach and income approach. Market value: price * quantity Nominal GDP= actual price * actual quantity Real GDP: base year price * actual quantity Years Pucks Root BEER MADE SOLD MADE SOLD 2005 100 5$ 300 20$ 2010 125 7$ 400 18$ 2005 nominal GDP = (5*100)+(20*300)= $6500 2010 nominal GDP = (7*125)+(18*400)= $8075 2010 real GDP (2005 base year) = actual quantity *2005 price =(125*5)+(400*20) =$8625 Base year nominal GDP: real GDP GDP deflator= nominal GDP/real GDP * 100 2010 GDP deflator =8075/8625*100=93.6 Genuine progress index Genuine happiness index: Bhutan want to see their economic self-reliance. Tourists must pay a daily fee to stay there, this helps preserve the land as well as the culture, and they want good governments in the form of democracy. Working age population: 15 years of age or older. Labour force: employed and the people who are unemployed (not have a job, looking for a job, and are able to start work) Participation rate= labour force/working age population*100. Unemployment rate= number of unemployment/labour force *100. Working age population = 2000 Labour force = 1500 Employed = 1200 Participation rate: 1500/2000*100= 75% Unemployment rate: 300/1500*100=20% Discouraged workers= 100 not included for unemployed because they have given up on looking for a job Consumer price index: helps monitor inflation Basket of goods and services: things a family will buy with a fixed quantity Monthly Expenditures 2000 2001 Pizza (20) 200 (@10) 220(@11) Rent 600
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