ECON 102 Lecture Notes - Lecture 28: Potential Output, Business Cycle, Output Gap
Document Summary
Economic growth they like real economic growth to be high rather than low. The business cycle - try to avoid large fluctuations in output avoiding so called boom and bust cycles. Inflation like to keep it low and stable, also try to avoid deflation. Unemployment like to keep it low, avoiding large fluctuations. Balance of payments like to keep the balance of payments on a sustainable path. There are a variety of policy measures used by the government to affect the overall performance of the economy. Taxes on income and expenditure and other taxes - t. Note if g >t we have a fiscal deficit. if g