Textbook Notes (363,137)
Canada (158,217)
Economics (923)
ECN 204 (281)
Chapter 4

Chapter 4

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Ryerson University
ECN 204
Thomas Barbiero

CHAPTER 4: GDP, Growth, and Fluctuations (Introduction to Macroeconomics) Macroeconomics studies behaviour of the whole economy as a whole The business cycle: recurring increase and decrease in the level of economy activity over period of years Recession: period of decline in total output, income, and employment 4.1 Assessing the Health of the Economy: Performance and Policy Real GDP (read gross domestic product): measures the value of final goods and services produced within the borders of a given country during a given time period, typically a year o tells us whether a economy is growing o nominal GDP must be found before real GDP can be determined and correct the prices Nominal GDP: dollar value of all goods and services produced within the borders of a given country using the countrys current prices during the year the goods and services were produced o Problem: since it uses current prices, it can increase from one year to the next even if no increase in output has occurred Unemployment: failure of the economy to fully employ its labour force Inflation: increase in the overall price level o Can cause decrease in standard of living o Surprise jump in inflation reduces the purchasing power of peoples savings 4.2 The Miracle of Modern Economic Growth Modern economic growth: historically recent phenomenon in which nations for the first time have experienced sustained increases in real GDP per capita o Increase in output per person as compared with earlier times in which output (but not output per person) increased. The vast differences in living standards seen today between rich and poor countries are almost entirely the result of the fact that only some countries have experienced modern economic growth. GDP per capital: average amount of output each person in each country could have if each countrys total output were divided equally among its citizens; measure of each countrys average standard of living 4.3 Savings, Investments, and Modern Economic Growth www.notesolution.com
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