Lecture 11 - ECO 100Y Introduction to Economics Lecture 11:...

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© Gustavo Indart Slide 1 ECO 100Y Introduction to Economics Lecture 11: Introduction to Macroeconomics
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© Gustavo Indart Slide 2 The Study of Economics ± Microeconomics is concerned with the study of the choice problem faced by the economic agents: households and firms ¾ Microeconomics, for instance, examines how the equilibrium price for a particular commodity is determined ± Macroeconomics is concerned with the study of the economy as a whole ¾ For instance, macroeconomics examines how the general level of prices is determined (and not the price of any particular commodity)
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© Gustavo Indart Slide 3 Growth vs. Fluctuations ± The main concern of government economic policy is to: ¾ facilitate the smooth working of the economy in the short-run ¾ promote the growth of the economy in the long-run ± The economy goes through periods of expansion and period of contraction during what is called the business cycle ¾ During period of expansion demand might grow too fast and inflation might occur ¾ During periods of contraction demand might fall too much and unemployment might grow ± The government might attempt to smooth these changes in the economy in order to prevent the negative effects of high inflation and high unemployment ± The government can use two main types of economic policies : fiscal policy and monetary policy
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© Gustavo Indart Slide 4 Fiscal Policy ± Fiscal policy refers particularly to changes in the level of government expenditures on goods and services and in the level of taxes the government collects ¾ Short-run: it affects the general level of aggregate demand ¾ Long-run: it might affect investment and thus economic growth
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© Gustavo Indart Slide 5 Monetary Policy ± Monetary policy refers particularly to changes in the stock of money
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This note was uploaded on 01/16/2011 for the course ECO ECO100 taught by Professor Inheart during the Fall '09 term at University of Toronto- Toronto.

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Lecture 11 - ECO 100Y Introduction to Economics Lecture 11:...

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