ECO102H1 Lecture Notes - Lecture 4: Nominal Interest Rate, Real Interest Rate, Exchange Rate
45
ECO102H1 Full Course Notes
Verified Note
45 documents
Document Summary
Lecture 04: short run fluctuations, inflation, unemployment, long-run growth. If both prices and production rises, how do we compare years: gdp deflator, cpi, both measure price changes in different manners. Find solutions on portal to real vs nominal gdp example. Problems with gdp accounting: household production and non-market activities, underground economy and illegal activities, resource depletion and environmental degradation, economic inequality (countries with more people and more land should have higher. Gdp: leisure time and quality of life. Problems with the cpi: ignores substitution effects and quality improvements. Unemployment rate: fraction of people in the labour force that cannot find employment: u = ( number of people unemployed/labour force ) x 100. Labour force: number of people employed plus people unemployed looking for work. Eco100y l0201: frictional: delay in finding work, structural: mismatch between jobs and skills, cyclical/seasonal: moves with business cycle. Nominal interest rate: money price of borrowing money (opportunity cost)
