Exchange Rates and the BOP

FINALLY: EXCHANGE RATES AND THE BALANCE OF PAYMENTS!!!!!!!!!!!!!! Okay- final bit, and then we can all write our exams and promptly forget everything we ever needed to know about economics! =D What is a balance of payments? It's a summary account of...

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Trade Policy

This chapter looks at the policies which either facilitate or impede free trade in the world! As economists, we usually are in favor of free trade. We recognize that free trade offers many benefits to different countries! Why is free trade a good idea?-The...

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Gains from International Trade

OKAY! Let's talk turkey about international trade. Over time, while world GDP had been increasing at a fairly constant rate, world trade has increased exponentially! Canada is, itself, involved in quite a bit of international trade (we export and...

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Unemployment

Okay- I'm really behind in these online notes, but I'm going to catch up as much as I possibly can tonight. Unemployment is scary stuff! Here we go! CHANGES IN UNEMPLOYMENT:-In the long run, increases in the labor force should be matched by changes...

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More Irritating Details About Inflation

The Phillips Curve & Accelerating Inflation -We know what the Phillips curve is. I'm not explaining it again.-At Y* and U*, there is no gap inflation-When the economy is in an inflationary gap, the BoC must validate for wage inflation-In the 1960s,...

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Demand Shocks and Accelerating Inflation

INFLATIONARY DEMAND SHOCKS AND INFLATION-An increase in consumption, investment, government expenditures, and net exports causes an increase in aggregate expenditure, a rightward shift in aggregate demand, and an increase in the equilibrium price level. IF...

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Inflation and Supply Shocks

FROM WAGE CHANGES TO PRICE CHANGES -If a change in money wages is positive (wages increase), short run aggregate supply will decrease (it shifts to the left due to increased costs). This causes prices to rise, and the overall effect is inflationary-If...

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The Gap Effect, and the Expectation Effect

THE WONDERFUL WORLD OF INFLATION: People talk about inflation a LOT, so its probably a good idea know what it is. If you've survived macroeconomics without knowing what inflation is up until this point, congratulations, you live a seriously charmed...

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The Transmission Mechanism

So... what happens when the money supply changes? How does this affect things? That's what we're going to figure out today! Remember the marginal efficiency of investment function...

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The Demand & Supply for Money

The Liquidity Preference Function: This shows people's preference to hold money (cash balances) rather than bonds (interest bearing assets) -People have a choice between holding their wealth in one of two ways: bonds or money -Money pays no returns,...

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Bonds!

TODAY: WE ARE GOING TO LEARNING ABOUT THE MONEY MARKET: This basically let's us understand how the money supply determines the interest rate BONDS: What are bonds... Well... Wealth is accumulated purchasing power, and wealth can be held in assets, or...

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MONEY MONEY MONEY

Money Money Money! THE NATURE OF MONEY -Classical economists arbitrarily divided economies into the real sector, and the monetary sector.-The REAL SECTOR describes the allocation of resources to produce different goods-Resource allocation (use of...

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GROWTH ACCOUNTING It is generally believed that labour accounts for about 2/3 of all income generated, and that capital accounts for approximately 1/3 of national income as such, percentage-growth in potential national income is = to the percentage...

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The Neoclassical Growth Model and Steady States

THE NEOCLASSICAL GROWTH THEORY: This focuses on capital accumulation, and how it is affected by savings One important function in the neoclassical growth theory is the AGGREGATE PRODUCTION FUNCTION. This function shows the relationship between total...

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Economic Growth: Savings and Investments

The Very Long Run: Economic Growth Models We can measure long run economic as the annual percentage change in per-capita real potential GDP.Ecoonomic growth causes Y* to move to the right. The standard of living is measured by the per capita real actual...

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Macroeconomic Timespans

Macroeconomic Time Spans: Changes can have different effects over the long run than they do in the short run! This is just going to be a brief comparison exercise between the long run and the short run. -------------> <------------- -------------> <--------------------------> <--------------------------> <--------------------------> <-------------...

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Supply and Demand-Side Economics

Long-run aggregate supply, however, can shift if the potential national income shifts. When potential national income increases, this brings the equilibrium price level down, and the equilibrium level of GDP up in the long run. Neoclassical economists...

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Supply Shocks and Other Important Things!

SUPPLY SHOCKS: These also correct themselves in the long-run, but unlike demand shocks, these do not cause any net changes in the price level. NEGATIVE SUPPLY SHOCK -Let's say that the cost of oil rises: this shifts AS to the left, which decreases overall...

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Factor Prices and the Output Gap!

Oh dear god, am I ever behind schedule for these notes... Okay, today, we're going to have a look at what happens to our economic model when we allow factor prices (this usually refers to wages) to vary. Up until this point, we've been assuming that...

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MACROECONOMIC EQUILIBRIUM: Putting it all Together

So, we have the aggregate supply curve and we have the aggregate demand curve.AD measures levels of production which won't change over time as a function of priceAS measures levels of production which suppliers will actually produce at as a function...

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Aggregate Supply

In the short run, we're going to assume that factor prices remain constant (but later on, this can change, as we look at the long run) The short run aggregate supply curve shows the amount which firms are willing to produce at any given price level. Aggregate...

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Aggregate Demand

ECON 101 HELL WEEK BLOG REVIEW: PART 1: DEMAND SIDE EXPENDITURE PART 2: SUPPLY SIDE EXPENDITURE PART 3: EQUILIBRIUM: PUTTING IT TOGETHER ---------------------------------------------------- PART 1: DEMAND SIDE EXPENDITURE We know that National Income...

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Putting it ALL together! Building and fiddling with aggregate expenditures!

 EQUILIBRIUM NATIONAL INCOME AND THE AGGREGATE EXPENDITURE FUNCTION: REMEMEBER: Consumption is a function of disposable income (income minus net taxes) and net taxes are taxes minus transfer payments.So, when you add the government to the economy,...

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