COMM 394 Chapter Notes - Chapter 14: Discouraged Worker, Frictional Unemployment, Monetary Policy
Document Summary
Macroeconomic stabilization policies are very important in conditioning the general business environment (interest rates, exchange rates, inflation rates, liquidity conditions, unemployment rates, public debts, etc) Stabilize the pace of economic activity and encourage economic growth (prevent volatility such as great depression) Keep unemployment and inflation rates low and stable. Considering the effects of policy decisions for short-term and long-term effect (be careful of temptation to increase growth rate temporarily to address short-term problem but is actually damaging in long term) Long-run economic growth is most important measure of change in an economy"s performance (few decades of rapid economic growth can increase welfare) To increase market liquidity: increase money supply increase the amount that can be loaned or used to buy other assets. Print money give/loan printed money to government or financial institution. Credits an account held by commercial bank. Bank rate also acts as signal of bank of canada"s intentions.
