ECO 1102 Study Guide - Winter 2018, Comprehensive Midterm Notes - Gross Domestic Product, Canada, Recession
ECO 1102
MIDTERM EXAM
STUDY GUIDE
Fall 2018
Macroeconomics
January 9th and 11th
• Macroeconomics is the study of how people manage resources
• Limited resources
• Wants are unlimited
• Needs are not wants and therefore they are not unlimited
• Use economics for optimal allocation of scarce resources
• Adam Smith wanted to know why some countries were rich while others were
poor
• Classical economist
• Believe in free market
• No government intervention (exceptions such as armies)
▪ Intervene for things people wouldn’t want to pay for
▪ Payment of services through taxes
• Because of force the government can enforce taxes, but private sectors
cannot
• 1929 was the market crash
• The market was in recession
• The great depression
• Banks
• Stock market
• Sources of market problems
• GDP (gross domestic product) measures the production of a country
• GDP goes down means that the production of a country has gone down
• Less production, less workers need, more unemployment
• Unemployed people will stop buying normal goods
• Decreases production in the market
• It is a big cycle
• John Keynes
• Believes that sometimes market fails and intervention has to occur
• Increase income will increase their demand
• If the demand of anything goes up, there will be opportunity to produce
and make money
• Hiring people will increase demand
• A circle is once again created, but instead it is a positive one
• Government can hire people to increase income
• Fiscal policies—> the government influence on the market
• Government will start projects to increase workers and income to bust the
market
• Micro is individuals
• Macro is all economy, the whole performance of the economy
find more resources at oneclass.com
find more resources at oneclass.com
Tuesday January 16th
Chapter 7- measuring the wealth of nations
1st -USA
2nd-China
3rd-Japan
How do you measure the size of the economy?
Why measure?
Compare ourselves to our past and compare with other countries
→ see if we are moving in the right direction
GDP vs Time graph → fluctuates over time but has a positive trend which is good
• Increasing trend is good but they still have different slopes of increase.
• The steeper the trend the better.
• Every country wants to increase their trend.
The fluctuations differ among countries.
• The less the GDP fluctuates, the better.
• The larger the variation, the worse because it is harder to predict and plan for the future.
• All predictions have error but with less fluctuations there is less error.
• An economy with large fluctuations is not good.
• The goal for countries is to stabilize the economy.
Negative slope = Recession but we also need other indications, need to see GDP declining,
Bankruptcies increasing,
Positive slope= Boom
Try to stabilize the economy to make it more predictable.
Macroeconomics → is the study of the economy on a broad scale, focusing on issues such as
economic growth, unemployment and inflation
How to define GDP? (Gross Domestic Product)
→ is the sum of the market values of all final goods and services produced in a country within a
given period of time.
find more resources at oneclass.com
find more resources at oneclass.com
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ECO 1102 Full Course Notes
Verified Note
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Document Summary
John keynes: believes that sometimes market fails and intervention has to occur. Compare ourselves to our past and compare with other countries. See if we are moving in the right direction. Gdp vs time graph fluctuates over time but has a positive trend which is good. Increasing trend is good but they still have different slopes of increase: the steeper the trend the better, every country wants to increase their trend. Negative slope = recession but we also need other indications, need to see gdp declining, Try to stabilize the economy to make it more predictable. Macroeconomics is the study of the economy on a broad scale, focusing on issues such as economic growth, unemployment and inflation. Is the sum of the market values of all final goods and services produced in a country within a given period of time. Ex; units to count different goods and services is different.
