RSM100Y1 : Review.Notes
Document Summary
If velocity is constant, a rise in the price level means that money supply rose and the level of transactions stayed the same. Command economies fail because they do not generate enough innovation. Marxist ideas: workers were alienated, workers will eventually own all capital, and the power of the state will eventually wither away. Developing economies grew because they opened up foreign trade and increased exports. Gold serves 0 purpose in the monetary system. A low unemployment rate and low interest rates (and rising money supply) lead to inflation because of more spending. When interest rates decrease, investments increase and so do jobs! Depreciation leads to more expensive imports and cheaper outputs for other countries. Cutting taxes and increasing gov"t spending leads to increased demand for outputs and economic growth. Govt spending on education is an possible source for total factor productivity. A larger physical capital stock is a possible source for labour productivity growth.
