Econ midterm notes. - Lecture 1. Economic Growth/GDP People...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 1. Economic Growth/GDP People started studying growth in the 1750’s o Started studying econ in the great depression o Adam Smith: Wealth of Nations o Jahn Keynes: focus on short term Economic growth is the expansion of the the economy’s PPF, measured in Real GDP. Real GDP is the total amount of goods and services in the US> Potential GDP is the value of the value of the real GODP when all of the economy’s resources are employed. Real GDP fluctuates with the business cycle, Potential does not. B- cycle => Expansion and recession. The main benefit of long term growth is expanded consumption posssibilites. Including more health care a for the poor and elderly. More research for cancer, etc Unemployment The pace of job creation fluctuates. During a recession, the number of jobs shrink. o Unemployment is steady at about 4.6% Unemployment rate is the number of unemployed people who wish to have job Unemployment is a proble m because of lost production and incomes and lost human capital Inflation We measure the level of all prices the prices. As an average of the prices that people pay for all the goods and services that they buy. The CPI –CPI—is a common measure of price level We measure inflation rate as the percentage change in the price level Unpredictable changes in inflation rate are a problem b/c they redistribute income in arbitrary way s between employers and workers and between borrowers and lenders High inflation diverts resources from productive activities to respond to inflation.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Eradicating inflation is costly bc it requires a period of greater than average employment Surpluses and Deficits Government surplus: if a government collects more in taxes than it spends Deficit is when a government spends more than it collects When a nation imports more than its exports it has an international deficit When a nation exports more than it imports it has an international surplus Policy Changes Five policy challenges for Macro
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/17/2008 for the course ECON 102 taught by Professor Rossana during the Fall '08 term at University of Michigan.

Page1 / 7

Econ midterm notes. - Lecture 1. Economic Growth/GDP People...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online