ECO 1302 Lecture Notes - Lecture 5: Potential Output, Ringfort, Frictional Unemployment

• School: University of Ottawa
• Department: Economics
• Course: ECO 1302
• Professor: Mario Seccareccia

Document Summary

Gdp is a measure of the gross production in an economy (only geographical boundaries of country) Include foreign trade in the calculations of the gdp. Gnp included calculations of those whether they are canadian residents or not. Potential gdp = the real gdp that the economy could produce if the labour force and other resources were fully employed. Produ(cid:272)tio(cid:374) fu(cid:374)(cid:272)tio(cid:374) = (cid:373)athe(cid:373)ati(cid:272)al depi(cid:272)tio(cid:374) of the relatio(cid:374)ship (cid:271)et(cid:449)ee(cid:374) a(cid:374) e(cid:272)o(cid:374)o(cid:373)(cid:455)"s i(cid:374)puts and outputs. Potential gdp is what the economy could produce if its labour force were fully employed. A(cid:374) e(cid:272)o(cid:374)o(cid:373)(cid:455)"s produ(cid:272)tio(cid:374) fu(cid:374)(cid:272)tio(cid:374) sho(cid:449)s the (cid:448)olu(cid:373)e of output that (cid:272)a(cid:374) (cid:271)e produ(cid:272)ed fro(cid:373) given inputs (labour, capital) given the available technology. Growth rate of potential gdp depends on: growth rate of the labour force, gro(cid:449)th rath of the (cid:374)atio(cid:374)"s capital stock, the rate of technical progress. Labour productivity: labour productivity = total output/total hours, this measures output per hour of work.