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Lecture 4

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University of Toronto St. George
Rotman Commerce
Chris Bovaird

Lecture 4 Thursday, October 27, 2011 3:01 PM Chapter 2-lecture 3 chapter 2 2nd slide: -purpose of any economic system rather its market like canada or command like cuba; produce the things that people wants, to gather around all the factors of production to produce what they. -make the stuff that people want; like food to eat, clothes and houses -GDP; domestic-within our home without our product (area) -product; the stuff that gets turned out. -USA on top then China -GDP; merely tells us about our size; one data points -to ask ourself how the economy is doing then we should find out if its producing more stuff is it turning out more ipod, pizza etc. GDP growth -Gdp growth; gdp is bigger then 2010 then 2007 then we have to assume more factories are hiring, more people are buying more stuff. -the big rich countires; UK, france; are fairly high so if your starting from a high point then ur rate of growth is most likely not to be increasing as dramatically -western countries are growing in 1,2,4% that tends to be the norm -some of the merging giants; Brazil, India and China -starting from lower base are growing; 6.7,8,9, china (10) -how do we know canada and usa are rich; GDP divided by the population GDP per capita -luxerberiger and norway are rich; very productive people, high educated people. -productivity; was a ratio what is the value of stuff that gets turned out by the people living in the countries. 19th slide: -richest countries have the most educated people that have access to the fanciest technology. -technology goes into improve transportation and communications -one of reason we have engineer etcs -we have lots of lots of natural resoruces; canada 21st slide: -one way to find out if a country is rich is to see if its using all of its factors of productions That are available to it. -productivty/purpose of an economy; is to use all of its factors of productions -an important measure. GDP, GDP per capital are all measure of showing how well a country is doing. -purpose of any economy is to give people something meaningful to do. -population of canada is around 34 million; not people are working or looking for work -labour force; number of people, people that want to work. Is around 16-18 million -labour force around half population; the other half is retired, jail or going to school fulltime -the unemployed is the percentage of the labour force (16-18 million) that could be working,should be and are activately looking for work. -activately seeking it -unemployment rate in canada is around 7-10%; around 8% -USA unemployment rate is lower then ours around 6% -historically and traditionally why is a smaller number of usa unemployed? Maybe our economy -since 2007; unemployment ins USA is 9.1% -some people say that the unemployment rate might be more then 9.1% they say the discouraged worker effect and underemployment -"discouraged" worker effect -Underemployment -underemployment; people that have a job, arent using their full skills and full capacity. -person had MS and working as a walmart greeter; isnt using their full skills. Can be used for high productivity stuff. -another example of underemployment is that you are working at what your good at but your only working part time. ; you have MS but your only working contract 3-4 months a year and other few months your talent arent being used. The economy is not turning out as much productivity as it should have. -discouraged worker effect; people are looking for a job, and looking for a job are finally like to hell with it and go travel or go to school. Go back and get another degree. Give up hope of getting a job. 26th slide: -inflation important thing to figure out if the economy doing what it should. Is it on the right track. -inflation; when the prices of goods are going up. But the products themselves arent any better there is no change in the quality or quantity of the product. -prices go up one of 2 reasons. -prices go up because of supply and demand; which seems to suggest that there is an insufficent number of red bikes being made; the market is misallocating resources their arent enough factors of red bikes starting up. -or the government policy is punishing people that want to get into the red bicycle business but chose not to; prices of bikes goes up -another reason for inflation is; the government prints too much money. -the governement prints more and more pieces of paper. -and as a result; the real value of each dollar and 2 dollar because of the excessive
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