ECON 2200 Lecture Notes - Lecture 23: Monetary System, Human Capital
ECON 2200
Lecture 23
o Impact: Wealth & Psychological
1. Affected people’s confidence about the future of the
economy
Anything that undermines consumer confidence
effects the economy, because people will not spend
when they do not feel good about their economic
future.
• Long, slow recovery:
o Real GDP did not reach & maintain pre-Depression rates until
late 1930s
o Manufacturing did not do so until 1939-40
• People choose and individual are the source of social outcomes.
o Scarcity makes people make choices. Choices involve risks.
• Choices impose costs.
o Choices involve trade-offs and opportunity costs.
• Incentives matter.
o Disincentives discourage actions. When incentives change,
behavior changes in predictable ways.
• Institutions matter and the “rules of the game” influence choices.
o Laws, moral principles, ideas, and cultural institutions influence
individual choices and shape the economic system. (ie.
Monetary system, government)
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