Mac1 - ECO 100Y Introduction to Economics Lecture 0...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
© Gustavo Indart Slide 1 ECO 100Y Introduction to Economics Lecture 0: Introduction to Macroeconomics
Background image of page 1

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

View Full Document Right Arrow Icon
© 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)
Background image of page 2
© 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
Background image of page 3

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

View Full Document Right Arrow Icon
© 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 Ͳ run: it affects the general level of aggregate demand ¾ Long Ͳ run: it might affect investment and thus economic growth
Background image of page 4
© Gustavo Indart Slide 5 Monetary Policy ± Monetary policy refers particularly to changes in the stock of money in the economy or to changes in the rate of interest ¾ This is done by the Bank of Canada ¾ Changes in the rate of interest affect aggregate demand ¾ Changes in the money supply will affect the rate of interest and thus aggregate demand ¾ Greater impact on investment and consumption of expensive goods in particular
Background image of page 5

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

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 21

Mac1 - ECO 100Y Introduction to Economics Lecture 0...

This preview shows document pages 1 - 6. Sign up to view the full document.

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