MACRO - Chapter 1
Card Set Information
MACRO - Chapter 1
The Great Recession
Economic downturn of 2008-2009
The Great Depression
Economic downturn between 1929-1933
Macro Economics looks at and grows out of the decisions that would made that made the great depression last as long as it did.
Fallacy of Composition
What is true for one is not true for all whole is greater than the sum of the parts.
Pardox of Thrift
attempts to increase savings cause aggregate savings to decrease because of falling employment and incomes.
Determine incomes households are sellers and businesses are buyers
Determine the value of all products/services sold households are buyers and businesses are sellers
ups and downs of overall economic activity
Supply creates its own demand
Government policy fails to serve the public interest.
(Gross Domestic Product) Value of all final products and services produced annually in Canada.
Is High GDP or Low GDP Good?
High GDP per person is good, Higher GDP means there is more goods and services to satisfy the wants.
Not employed but actively looking for work.
When the value of money falls but the prices keep rising.
Business purchases of new factories and equipment (Long term Assets)
To spend or save AND to buy canadian made products or imports
To hire labour, AND to buy local supplies or imports. Also they have to choose to either sell locally, or export.
Changes in government purchases and taxes/transfers to achieve microeconomic outcomes of steady growth full employment and stable prices
Bank of Canada changes interest rates and the supply of money to achieve macroeconomic outcomes of steady growth full employment and stable prices.
(ROW = Rest of world) They choose to export goods from canada and to import goods to Canada. This explains the connection Canada has with the rest of the world.