Political Science 2211E Lecture Notes - Lecture 6: Disinflation, Aggregate Demand, Monetary Policy
4 Feb 2019
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Total demand for good and services in economy. Amount of money consumers and firms have to spend. Gdp: value of all goods/services produced in a country in a given year. When gdp shrinks, it"s referred to as negative growth. 2 quarters of negative growth = recession. Percentage of labour force that is seeking employment but are not employed. Does not include part-timers looking for full-time employment. More people are buying, will hire more people. Inflation rate is the percentage changes in price level overtime. Deflation: lowering of general level of prices. Disinflation: prices go up but the level of inflation is decreasing. Government"s control over interest rates through central bank. Ex: bank of canada, us federal reserve. Use interest rates to regulate demand and maintain balance between inflation and unemployment. People and firms pay less interest on existing loans. Cheaper to get new loans for purchases and expansions.
