Macroeconomics Douglas College

• Insuffisent demand from Firms and Govrment.
• Economic is in Rezession and needs less workers.
• 0.5%

• Arises when changes in technology or international competition change. Skills needed to perform jobs or change the locations of jobs
• Lasts longer than frictional becaus workers must retrain and relocate to find a job.
• Industry Basis
• Longterm Frictional
• 3%

• All the unemplyment is caused frictional and structural - no cyclical
• Full emplyment = unemplyment rate equals the natural unemplyment rate
• Influanced by
  • Age distribution of the population ( young population -> large number of new job seekers -> hight level of frictional unemplyment)
  • scale of structural change (technological change -> machine instead of workers)
  • the real wage rate (effektiv lohn)
  • unemplyment benefits (extending unemplyment benefits increases the natural unemployment rate)

• Jobmarket information
• Retraining and Relocation
• Tightening Emplyment and Insurance Benefits

• Monetary Policy
  • Stimulate Demand for Goods and Supplies
    • Moneysupply up -> interest down -> Consumation and Investments up
• Fiscal Policy (changes in Goverments budget
  • Cut taxes or increase it's spending -> runs a budget defisit
    • If it borrows dollar so increase of national debts

• Gross Domestic Product (Brutto Inland Produkt)
• Measures the national income
• The total value of goods and services produced in the economy during a given period

• Consumer Price Index
• Measures the average of the prices paid by urban consumers for a fixed basket of conumer goods and services.
• Tells us about the value of the money in our pocket.
• Select CPI Basket: Survey the monthly Price; Calculate CPI
• We can calculate the Inflationrate -> (CPI this year - CPI last year ) / CPI last year

1. What is produced and how? Allocation of scarce (knappheit) resources among alternative uses.
2. What is consumed and by whom? 
3. Why are resources sometimes idle (Leerlauf)? 
4. Is productive Capacity growing? 

• LD -> Natural Resources
• L -> Labour
• K-> Capital

The lowest we can get the unemplymentrate without causing inflation to accelerate.

-> Hire people to produce more -> rises prices -> inflation

Natural rate of unemplyment: NAIRU -> Non-accelerating-inflation-rate of unemplyment

working people and people searching work

Persons age 15+ who are working or actively seeking work. LB is affected by changes in the participation rate in %.

Inflation Rate + Risk premium + Real rate

3%+5%12%= Market rat of interest -> 10% 

Nominal interest rate: The price paid per dollar borrowed per period of time

Real interest rate: The nominal rate of interest adjusted for the change in the purchasing power of money. Equal to the nominal interest rate minus the rate of inflation

The echange rate is the number of Candaian dollars required to purchase one unit of foreign currency

If C$ increases so FER decreases; Export decreases; Import increases

FER= 1/0.75= 1.33

depreciation: A rise in the exchange rate - it takes more units of domestic currency to purchase one unit of foreign currency

appreciation: A fall in the exchange rate

Consumption + Investment + Government purchase  + Export- Import

Demand for goods and supplies decrease, production decreases, national income decreases and U rate increases

Changes in AE affects changes in RNI and U rate

It depends on the real interest rate. If real interest rates dicreases so no. If real interestrate increases so yes.

Withdrawls (W)-> Savings, Taxrs, Import

Infections (J) -> Investments, Governments spendings, Export

If W>J economic will slowdown

If W=J RNI stays same 

If W<J RNI increases; output rising

GDP: Measures the value of all production located in Canada, no matter who receives the income from that production. Income produced. Is superior as a measure of domestic economic activity.

GNP: Measures the income received by Canadian residents, no matter where the produciton occured to generate that income. Income received. Is superior as a measure of living standards of residents.

Toyota cars produced in Canada contribute to Canada's GDP. But the portion of profits that returns to foreign shareholders in not part of Canada's GNP.

Expenditure: C+ I+ G+ X-M= Total GDP      

Income: Factor Incomes( Wages, Interest, Business profits)+ Non-factor Payments ( Depreciations, Ind. Taxes)= GDP

1. Total value added from domestic production
2. Total expenditures on domestic output (expenditure approach)
3. Total income generated by domestic production (income approach)

Comparison of nominal and real GDP, index of average price of all goods and services produced in economy.Is a ver comprehensive index of prices because it includes the prices of all goods and services produce in the country. Price index for the whole economy.

Nominal GDP/ Real GDP * 100

Nominal GDP: GDO valued at current prices

Real GDP: GDP valued at base-period prices.

If not the same so prices must have changed over the period.

Desired expenditure is what consumers and firms would like to purchase, given their real- world constraint of income and market prices.

Increase in wealth, decrease in interest rate, increase in optimism.

45grad-line= AE=Y

AE=C+I+G+X-M= Desired actual