ECON 219 Lecture Notes - Nominal Interest Rate, Potential Output, Output Gap

• School: McGill University
• Department: Economics (Arts)
• Course: ECON 219
• Professor: Christopher Ragan

Document Summary

Real gdp: growing at about 3%/year (q is growing) Gdp measures the value of market based transactions but not things like clean air, clean water, forests, getting along with coworkers/boss, Recessionary gap: not everyone fully employed (not where we are now). Currently we are about 1% below potential output. It is an estimate based on certain assumptions resulting in slightly different estimates. Labour force: #people employed and #people looking for a job. Unemployment will never be 0 (people leave labour force) In a recession, it"s not that every one takes a 3% cut in income, for example, but 95% don"t take any cut and the other 5% take the rest. Productivity: the use of this word is not enjoyed. Measure of output (gdp) per unit of input. Productivity: gdp per work effort (work effort can be per worker or per hour worked) Price level: a measure of the average price of things in the economy.