MGEA05H3 Chapter Notes - Chapter 19: Potential Output, National Product, Longrun

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA05H3
• Professor: Michael H O

Document Summary

The study of how the economy behaves in broad outline without dwelling on much of the detail that occurs in markets for individual products. The study of the determination of economic aggregates: total output, total investment, total exports, total employment, the price level, the rate of economic growth, how government policies may influence these aggregates. A full understanding of macroeconomics requires understanding the nature of short-run fluctuations as well as the nature of long run economic growth. Real national income (constant-dollar national income: national income measured in constant (base-period) dollars, changes only when quantities change, calculate national income with a base price (pb) (cid:14)(cid:25)(cid:20)(cid:16)(cid:17)(cid:18)(cid:16) (cid:14)(cid:25)(cid:20)(cid:16)(cid:17)(cid:18)(cid:19, the difference must be caused by q. Q (ppqp + plql) (2008 as base year: p2008qp + p2008ql ) * the nominal value and real value of the base year is always equal (6000 for 2008) * the price distortion overstates the percentage changes.