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ECON1010 Final Exam Summary and Cheat Sheet

by Anu J
7 Pages
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York University
ECON 1010
Steven Edwards

Notes by: ANU J Introduction to Macroeconomics (ECON 1010) Professor: Steve Edwards Textbook: “Economics: Canada in the Global Environment” Parkin/Bade 8 ed. th Cheat Sheet (don’t actually cheat on the exam!) INCLUDES CHAPTERS: 1, 2, 3, 20, 21, 22, 25, 26, 27 (sorry I got lazy) This is a study sheet I made containing key concepts and formulas that I needed to remember. Your study sheet may be different from this. Use this as a guide only. Good luck on the exam! Introduction - Defining economics: o Choices o Scarcity o Incentives - Factors of production and their costs o Labour = wages o Land = rent o Capital = interest o Entrepreneurship = profit - Economic growth occurs through: o Technological advancement o Capital accumulation - Economic institutions that evolved to facilitate trade: o Firms o Markets o Property rights o Money - Circular closed flow model of economics contains: o Firms o Households o Factor markets o Goods markets - Ceteris paribus = all other things (variables, factors) remain constant - Law of demand = the quantity demanded of a good is inversely related to the price of the good, ceteris paribus - Influence on demand caused by: Professor: Steve Edwards Course: Introduction to Macroeconomics (ECON 1010) Notes by: ANU J o Prices of related goods  Substitutes  Complements o Expected future prices of:  The good itself  Related goods o Income  Normal goods  Inferior goods o Expected future income and credit o Preferences/tastes o Population - Law of supply = the quantity supplied of a good and the price for that good are directly related - Influence on supply caused by: o Price of factors of production  Land  Labour  Capital  Entrepreneurship o Price of related goods produced  Substitutes  Complements o Expected future price of:  The good itself  Related goods o Number of suppliers o Technology o State of nature GDP - Defining GDP: o Market value o Final goods and services o Produced in a country o Given time period Professor: Steve Edwards Course: Introduction to Macroeconomics (ECON 1010) Notes by: ANU J - Nominal GDP = valued at prices of same year - Real GDP = valued at prices of base year - Potential GDP = maximum level of real GDP that can be produced while avoiding shortages in the factors of production that would bring inflation - Increases in real GDP and potential GDP: - In the circular model of economics (in the Parkin-Bade text at YorkU): o A is income (Y) o B is consumption expenditure o C is government expenditure o D is investment o E is net exports - Expenditure approach to calculate GDP: o GDP = Y = C + I + G + ( X – M ) - Income approach to calculate GDP: o GDP = wages, salaries and other supplementary incomes + other factor incomes + ( indirect taxes – subsidies ) + depreciation - Statistical discrepancy = difference between the income approach calculation of GDP and the expenditure approach calculation of GDP Employment - Marginally attached worker is one who is: o Not working o Not looking for a job o Available to work o Wants to work o Has looked in the recent past Professor: Steve Edwards Course: Introduction to Macroeconomics (ECON 1010) Notes by: ANU J o Not counted as part of the labour force - Unemployed person is one who is: o Available to work o Wants to work o Doesn’t have job, has been laid off, is waiting to be called back or will be starting a job within four weeks o Looked for work in the previous four weeks - Working age population is 15 to 65 - Labour force participation rate fluctuates more than the employment-to- population rate - Types of unemployment are: o Frictional = between jobs, voluntary o Structural = comes from changes in business structure resulting from technological processes o Cyclical = people laid off during recession, goes with business cycle o Natural = not including cyclical unemployment - CPI = consumer price index o CPI defined to equal 100 for the reference base period  Current base period is 1982-1984  CPI = 100 for the average of 36 months (Jan 82 – Dec 84) o Calculating CPI  (CPI Basket at current prices / CPI basket at base prices) *100 o TIP: If CPI is 177.2, in
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