Chapter 7 introduction to economic growth and fluctuations. In this chapter you will learn: The definition and causes of economic growth, the nature and cause of the business cycle, the nature of unemployment and its measurement, the definition of inflation and how it is measured, the redistribution effects of inflation the output effects of inflation.
Trang 2In this chapter you will learn
In this chapter you will learn
The definition and causes of economic growth
The nature and cause of the business cycle
The nature of unemployment and its
measurement
The definition of inflation and how it is
measured
The redistribution effects of inflation
The output effects of inflation
Trang 3Chapter 7 Topics Chapter 7 Topics
Economic Growth
The Business Cycle
Unemployment
Inflation
Redistribution Effects of Inflation
Effects of Inflation on Output
Trang 4Economic Growth Economic Growth
an increase in real GDP over some time
period, OR
over some time period
Trang 6Chapter 7 Topics Chapter 7 Topics
Economic Growth
The Business Cycle
Unemployment
Inflation
Redistribution Effects of Inflation
Effects of Inflation on Output
Trang 7Phases of the business cycle
Trang 10Canadian Recessions: Post 1945
% Decline in Annual Real GDP
Trang 13Phases of the business cycle
The Business Cycle
provincial variations
Trang 14The Business Cycle
Causation: A First Glance
– innovation
– changes in productivity
– money supply changes
– total spending changes
Cyclical Impact: Durables &
Nondurables
Trang 15Chapter 7 Topics Chapter 7 Topics
Economic Growth
The Business Cycle
Unemployment
Inflation
Redistribution Effects of Inflation
Effects of Inflation on Output
Trang 16The Labour Force, 2000
Not in labour force (8.3 million)
Under 15 &/or institutionalized (6.3 million)
Trang 18Measurement of Unemployment
Measurement of Unemployment
Criticisms of the calculation:
part-time employment
discouraged workers
Trang 19Types of Unemployment
Frictional Unemployment
Trang 20Types of Unemployment
Frictional Unemployment
Structural Unemployment
Trang 21Types of Unemployment
Frictional Unemployment
Structural Unemployment
Cyclical Unemployment
Trang 22Definition of
“Full Employment”
Definition of
“Full Employment”
natural rate of unemployment (NRU)
occurs when the # of job seekers
equals the # of job vacancies
not automatic
varies over time
Trang 23Economic Cost of Unemployment
Economic Cost of Unemployment
GDP Gap & Okun’s Law
The amount by which actual GDP falls
Trang 24GDP Gap & Okun’s Law: An Example
Given for 1992:
Natural Unemployment Rate = 7.5%
Trang 26Economic Cost of Unemployment
Economic Cost of Unemployment
Non-Economic Costs
Regional Variations
Trang 27Regional Variations
Provincial Breakdown of the Unemployment Rate, 2000
CANADA Newfoundland
PEI Nova Scotia New Brunswick
Quebec Ontario Manitoba Saskatchewan
Alberta British Columbia
Trang 28Economic Cost of Unemployment
Economic Cost of Unemployment
Non-Economic Costs
Regional Variations
International Comparisons
Trang 29GLOBAL PERSPECTIVE 7-2
Unemployment Rates, 1999
0246810
12
Canada’s unemployment rate
came down steadily through
the 1990s
Canada’s unemployment rate
came down steadily through
the 1990s
Trang 30Chapter 7 Topics Chapter 7 Topics
Economic Growth
The Business Cycle
Unemployment
Inflation
Redistribution Effects of Inflation
Effects of Inflation on Output
Trang 32Facts of Inflation
Annual Inflation Rates in Canada, 1971-2000
Fig 7-4
0 2 4 6 8 10 12 14
The major periods of inflation
in Canada were in the 1970s &
1980s
The major periods of inflation
in Canada were in the 1970s &
1980s
Trang 33inflation rates in Canada in the 1990s were relatively low
inflation rates in Canada in the 1990s were relatively low
Trang 35Chapter 7 Topics Chapter 7 Topics
Economic Growth
The Business Cycle
Unemployment
Inflation
Redistribution Effects of Inflation
Effects of Inflation on Output
Trang 36Nominal & Real Income
price index
% change in real income
% change in nominal income
– % change in price level
Trang 37Who is Hurt by Inflation?
assuming unanticipated inflation
Fixed-income receivers
Savers
Creditors
Trang 38Who is Unaffected or Helped
Trang 39Anticipated Inflation
Effects are lessened to the extent
Trang 40Interest Rate
Trang 41Interest Rate
Real Interest Rate
Trang 42Interest Rate
Real Interest Rate
Inflation Premium
Trang 43Deflation
Mixed effects
Arbitrariness
Trang 44Chapter 7 Topics Chapter 7 Topics
Economic Growth
The Business Cycle
Unemployment
Inflation
Redistribution Effects of Inflation
Effects of Inflation on Output
Trang 45Effects of Inflation on Output
Effects of Inflation on Output
Cost-Push Inflation & Real Output
Demand-Pull Inflation & Real Output
Hyperinflation & Breakdown
Trang 46Chapter 7 Topics Chapter 7 Topics
Economic Growth
The Business Cycle
Unemployment
Inflation
Redistribution Effects of Inflation
Effects of Inflation on Output
Trang 47BUILDING THE AGGREGATE EXPENDITURE
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