Business Administration - Accounting & Financial Planning ECN502 Chapter Notes - Chapter 4: Invisible Hand
27 Dec 2016
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Document Summary
Invisible hand: term by adam smith, 1723 1790, describe the mechanism of the market mechanism, nations capacity to produce an abundance of goods and services that underlies a nation"s riches, origin before macroeconomics. Great depression (entrenched recessions: period of sever economic slump lasting 10 years, high unemployment. Household sell labor services and other resources to firms. Capital: invest in firms by purchasing stock/bonds. Receive: wage, salaries, interest, dividend, transfer payments: they do not represent compensation for goods and services. Welfare: circular flow of income model that can be expanded to include flow generated form the economy when the government is included in the model. The behavior of the canadian economy: where gdp is produced, gdp is the value of all goods/services produced in a country in a period of time. Unemployment rate: number of people unemployed expressed as a labor force, if its to high, economy is not operating at full capacity, gdp can fluctuate quickly.
