ECON 1020 Lecture Notes - Lecture 44: Durable Good, Capital Good, Business Cycle

• School: University of Manitoba
• Department: Economics
• Course: ECON 1020
• Professor: Ryan A.Compton

Document Summary

Causes of shocks (fluctuations in the business cycle): irregular innovations. After the economy have largely absorbed the new innovation, the economy may for a time slow down or possibly decline: 2. Controlled by the central bank of canada (controls interest rates) Creating more money than people were expecting an inflationary boom of output occurs. Printing less money that people were expecting triggers an output decline and eventually a price-level fall: political events. A lot of what happens in politics effects the economy. Banks are supposed to bring in money from lenders, and find. Assessing risk and finding good borrowers helps the economy grow. Banks collapsing, bankrupt, etc makes the economy contract. Durable goods affected most (more discretion whether you are going to buy it) o capital goods (housing, equipment, commercial buildings: consumer durables (cars, fridges, stoves) Ex: difficult to cut back on needed medical and legal services. Food and clothing (can"t cut back on food and clothing)