ECON 1110 Lecture Notes - Lecture 2: Output Gap, Potential Output, Gulf War
2 Feb 2016
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December 1974-march 1975: fall in construction sector, inflation and financial crisis in the usa. June 1981-october 1982: fall in canadian housing sector, inflation. March 1990-april 1992: gulf war and introduction of gst. The real gdp that the economy would produce if its resources were fully employed. If y < y*: recessionary gap: there is an upward pressure on prices, the economy is operating below capacity, unemployment. Population = number of people in labour force + number of people not in the labour force. People in the labour force: employed (15+, people looking for work within the past 12 months. People not in the labour force: discouraged workers (unemployed for over 12 months, students who are not working (or those 15 and under, retirees. People in the labour force (n) = employed (e) + unemployed (u) 1 = e/n (employment rate) + u/n (unemployment rate) Labour force participation rate = (number of people in the labour force / population) x 100.
