ECN 204 Lecture Notes - Lecture 1: Fiscal Policy
Document Summary
Goals: high rate of growth of gdp, low unemployment rate, low inflation rate, no consistent deficit in the budget. If government is spending more that it is collecting leads to deficit, leading to borrowing. Debt: positive balance of trade exports > imports. Tools to achieve the goals: fiscal policy: government is responsible for the results of the goals. Ex: tax increase or decrease, government expenditure, monetary policy: bank of canada is responsible (central bank) Gdp: is the market value of all final goods and services produced in an economy in one year. Features of gdp: always measured in monetary terms ($) Total gdp: 15. 00+16. 00=. 00: only goods and services transacted through the market are included, only goods + services produced in the current year are included, barter transaction: excluded, unpaid work: excluded, underground transaction: excluded, resales: excluded ex. Reselling used books: unsold inventories: included if produced this year, only final goods : included to avoid double counting.