L11 - ECO 100Y ECO 100Y ECO 100Y ECO 100Y Introduction to...

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Unformatted text preview: ECO 100Y ECO 100Y ECO 100Y ECO 100Y Introduction to Introduction to Introduction to Introduction to Economic Economic Economics Economics Lecture 11: Lecture 11: Introduction to Introduction to Introduction to Introduction to Macroeconomics Macroeconomics Gustavo Indart Slide 1 The Study of Economic The Study of Economic The Study of Economics The Study of Economics ! Microeconomics is concerned with the study of the choice problem faced by the economic agents: households and firms " 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 " For instance, macroeconomics examines how the general level of prices is determined (and not the price of any particular commodity) Gustavo Indart Slide 2 Growth vs. Fluctuations Growth vs. Fluctuations ! The main concern of government economic policy is to: " facilitate the smooth working of the economy in the short- run " promote the growth of the economy in the long-run ! The economy goes through periods of expansion and period of i d i h i ll d h b i l contraction during what is called the business cycle " During period of expansion demand might grow too fast and inflation might occur " During periods of contraction demand might fall too much and unemployment might grow ! The government might attempt to smooth these changes in the ! The government might attempt to smooth these changes in the economy in order to prevent the negative effects of high inflation and high unemployment Gustavo Indart Slide 3 ! The government can use two main types of economic policies: fiscal policy and monetary policy Fiscal Polic Fiscal Polic Fiscal Policy Fiscal Policy ! Fiscal polic refers particularly to changes in the leve ! 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 " Short-run: it affects the general level of aggregate demand " Long-run: it might affect investment and thus economic growth Gustavo Indart Slide 4 Monetary Policy Monetary Policy ! Monetary policy refers particularly to changes in the stock of money in the economy or to changes in the rate of interest " This is done by the Bank of Canada " Changes in the rate of interest affect aggregate...
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This note was uploaded on 08/11/2011 for the course ECON 100 taught by Professor Carr during the Summer '10 term at University of Toronto- Toronto.

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L11 - ECO 100Y ECO 100Y ECO 100Y ECO 100Y Introduction to...

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