MGEA06H3 Lecture Notes - Open Market Operation, Gdp Deflator, Bank Reserves
selahanna2005 and 40086 others unlocked
2
MGEA06H3 Full Course Notes
Verified Note
2 documents
Document Summary
Gde = c + i + g+ nx. Issues related to national income: excludes nnp = gnp depreciation/cca, gdp - within country gnp by a country"s residents. Gdp only sold through the market. Excludes: pollution, illegal, volunteer, etc: nominal gdp vs real gdp. Real constant = pb x qn: gdp deflator = nominal/ real (pnqn)/(pbqn, correcting for price changes gdp b x (price index a/ price index b) Cost of bundle quantity doesn"t change: gdp deflator bundle produced within canada change current year bundle (understate, cpi by a typical canadian households base year bundle (overstate) Gdp deflator changes when prices of goods bought by firms or government changes. Cpi changes when prices of imported goods changes. Issues with inflation: reduces purchasing power of money, reduces the real value of anything, redistribution of wealth. Inefficiency solution: indexation (increases the monthly payment by the rate of inflation rate)