ECO102H1 Study Guide - Deflation, Fallacy, Nominal Interest Rate

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ECO102H1 Full Course Notes
ECO102H1 Full Course Notes
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Labour force = number of employed + number of unemployed. Unemployment rate = number of unemployed/ labor force * 100. Participation rate = labour force/ adult population * 100. Structural unemployment: mismatch in skill level, occupation, or region. Cyclical unemployment is zero unemployment is frictional or structural. When the economy is t the natural rate of unemployment (nairu): Bank of canada controls money supply/ interest rate to influence aggregate demand. Government uses expenditures/ taxes to influence aggregate demand. Canada 0. 5% (almost) no potential for further stimulus to a. d. from interest rate cuts. Potential to use money policy very limited. Result: u. s. and canada adopt expansionary fiscal policy. Outlays: government expenditures, transfer payments to households (unemployment insurance, social assistance, public pensions, etc. , interest on public debt. Revenues outlays = 0 balanced budget. Revenues outlays > 0 budget surplus. Revenues outlays < 0 budget deficit. Budget deficit => future outlays must be reduced and/or future revenues (taxes) increased.

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