ECON 1P92 Lecture Notes - Market Basket, Money Supply, Canadian Dollar

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2 Oct 2013

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ECON 1P92 Full Course Notes

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Studies the overall or aggregate of the economy. The overall price level, not individual prices. Total production in the economy, not the production by individual firms. Adjustments to changes across the whole economy. Total output produced is the total value of all goods and services produced. The quantity of total output is measured in dollars. If the price level changes over time and are removed, only changes in production remain. What the economy could produce if all the resources were employed at their normal levels of utilization. The difference between potential and actual output. Denote potential output by y* and actual output by y. When actual income (output) is less than potential income. When actual income (output) is greater than potential income. Growth in potential gdp can increase future incomes. Increase in average income doesn"t mean for all (not everyone benefits) Number of adult workers (15 and over) who hold jobs.

Related Questions

Real GDP refers to:

a. the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income.

b. GDP data which reflects changes in both physical output and the price level.

c. the sum of all monetary transactions which current in the economy during the current year.

d. GDP data which have been adjusted for changes in the price level.

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An improvement in technology causes the production possibilities frontier (PPF) to

	shift to the right.
	pivot upward.
	shift to the left.
	pivot downward.

(7)

Which of the following is not shown by the circular flow model?

	The flow of resources in one direction and money in the other
	The equality of aggregate spending and aggregate income
	The interaction of households, firms, and the government
	The total amount of goods and services the economy can produce

(8)

Gross domestic product (GDP) is defined as

	the market value of all final goods and services produced in an economy in a given period of time.
	the market value of all consumption goods and services produced in an economy in a given period of time.
	the market value of all investment goods and services produced in an economy in a given period of time.
	the real value of all investment goods and services produced in an economy in a given period of time.

(9)

Real GDP

	includes all domestic and foreign transactions.
	includes the dollar value of domestic transactions only.
	tries to isolate the effect of changing output, holding prices constant.
	measures GDP in terms of prices of goods and services produced.

(10)

When economists talk about economic growth, they are usually referring to

	the percentage change in nominal GDP.
	the percentage change in real GDP.
	the percentage change in nominal investment.
	the percentage change in real investment.

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True or False Questions:

1. Recessionary Expenditure Gap- Aggregate expenditures by which aggregate expenditures at the full employment GDP falls short of those required to achieve full employment GDP.

2. Private Closed Economy- An economy that includes consumer, business, and government segments of the economy.

3. Lump-sum taxes- A tax of a constant amount so the government obtains the same amount of tax at each level of GDP.

4. Aggregate Supply schedule- A relationship between a nation's price level and the amount of real domestic output that is produced.

5. Real Rate of Interest effect- The Nominal Rate of Interest earned on a project.

6. Savings- savings are planned investments by the consumer.

7. Wealth effect- The dollar amount of all the assets owned minus the dollar amount of all the liabilities or debt.

8. Savings Schedule - GDP less investment = savings

9. Aggregate Demand Schedule- a schedule that shows the amount of a nation's output (real GDP) that buyers desire to purchase at each price level.

10. Productivity- The measure of the level of the nation of real output and the amount of resources used to produce the output, less labor cost.

11. Multiplier effect- Measures the change in GDP to spending.

12. Injection- Investment by private business into the economy for capital goods is and injection into the economy.

13. Consumption schedule- The measurement of Disposable income less savings.

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ECON 1P92 Lecture Notes - Market Basket, Money Supply, Canadian Dollar

ECON 1P92 Full Course Notes

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