Class Notes (836,587)
Canada (509,861)
ECON 295 (44)
Lecture 2

ECON 295 Lecture 2: Lecture 2
Premium

3 Pages
95 Views
Unlock Document

Department
Economics (Arts)
Course
ECON 295
Professor
Mayssun El- Attar Vilalta
Semester
Winter

Description
1. Macroeconomics policy – Lecture 2: Chapter 19 What Macroeconomics is all about Some remarks before we start... 1. Most macroeconomic issues are about either long-run trends (economic growth) or short-run fluctuations (business cycles), and government policy is relevant for both 2. Two streams of research in macro: based explicitly on micro foundations, based only implicitly on these micro foundations 19.1: Key Macroeconomic Values Output and income - National product (output) is the most comprehensive measure of nation’s overall level of economic activity - The production of output generates income - Example: If a firm produces $100 worth of ice cream, that $100 ultimately represents income for the firm’s workers, the firm’s suppliers of material inputs, and the firm owners - National product = National income - To measure total output in dollars, we add up the values of the many different goods produced  This gives nominal national income - Nominal and real income are different  If nominal GDP increases, it doesn’t mean output increased - One of the most commonly used measures of national income is called gross domestic product (GDP)  Real GDP measures the quantity of total output produced by the nation’s economy over the period of a year  Real GDP fluctuates around a rising trend: o The trend shows long-run economic growth o The short-run fluctuations show the business cycle - Potential output: What the economy could produce if all resources were employed at their normal levels of utilization (full-employment output) - The output gap: Measures the difference between potential output and actual output - - - Why national income matters? - The long-run trend in real per capita national income is an important determinant of improvements in a society’s overall standard of living  economic growth makes people materially better off on average - In the short-run   Employment, unemployment, and the labour force - Employment: The number of workers (15+) who hold jobs - Unemployment: The number who are not employed but are actively looking for one - Labour force: The total number of employed + unemployed - Unemployment rate: The number of unemployed expressed as a percentage of the labour force Even when  called the natural rate of unemployment or NAIRU, which is around 7% in Canada o Frictional unemployment (natural turnover) o Structural unemployment (Mismatch between jobs and workers) When - Long-term trend: Employment has grown roughly in line with the growth in the labour force - Short-term fluctuations have been substantial  From 3.4% in 1966 to 12% in 1982 - Why does unemployment matter? Some unemployment is desirable, as it reflects the time required for workers and firms to “find” each other so that good matches are
More Less

Related notes for ECON 295

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit