GS101 Lecture Notes - Lecture 4: Government Debt, Monetary Policy, Invisible Hand
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International Trade and Business/Economics – Part
Orend: The basics
Five factors of the economic system
1. GDP *Know how to calculate*
2. Consumer Spending: Con#dence?
a. Is this related to Christmas Shopping?
3. Business Investment and Con#dence
4. Government Spending
5. Exports and Imports (Trade Balance)
Business Cycle (aka Boom and Bust)
The Business Cycle: Is it a good or bad thing?
What causes or determines a business cycle?
Who bene#ts? Who loses?
Why do some economies have bigger issues with business cycle?
The business cycle and role of the welfare state
What is the role of the state vis a vis a business cycle? Should there be
a role for the state? Or only the invisible hand?
How Tommy Douglas described it. (Who is Tommy Douglas)
oFounder of OHIP, CCF or NDP
oTommy Douglas – The cream separator
What is the role of interest rates? Mortgage rates?
oWhat about for international debt? Government debt?
Monetary policy vs. #scal policy?
oFiscal policy: How the government spends money
oMonetary: How the Bank of Canada control money supply
through interest rates
Hyperin8ation vs. de8ation
oHyperin8ation: in8ation grows out of control
oDe8ation: Prices go down
De8ation’s Downward Spiral
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