ECON 1010 Lecture 7: Canadian Inflation, Unemployment and the Business Cycle
Document Summary
Lecture seven: canadian inflation, unemployment and the business cycle. The 1920 s were years of unprecedented prosperity. In october 1929, this changed when the stock market crashed. By 1933, real gdp had fallen by 30% The price level had fallen by 20% The 1990s and the 2000s were also years of unprecedented prosperity. In october 2008, stock prices fell, real gdp growth and inflation slowed. People began to question whether or not we were heading towards another great. In the long run, inflation occurs if the quantity of money grows faster than potential gdp. In the short run, many factors can start and inflation, and real gdp and the price level interact. To study these interactions, we distinguish two sources of inflation. An inflation that starts because aggregate demand increases is called demand-pull inflation. Demand-pull inflation can begin with any factor that increases aggregate demand. An increase in investment that is stimulated by an increase in expected future profits.
