Unit 3 - Macroeconomics
Chapter 9 - An introduction to Macroeconomics
Key Concept
The key concept outlined in chapter 9 was the basics of Macroeconomics. Macroeconomics is the study of the economy as a whole. Later, in this unit the other significant factors, tools and techniques used by finance ministers and governments are outlined and are clearly shown how each of the factors, tools or techniques affect the overall economy. In this chapter however the concept that was mentioned countlessly was GDP. GDP has been used to measure the overall production of all resources produced within the country and however, has been adapted to show prosperity and well being. On the other hand GDP isn't made to measure prosperity but rather other indexes or like the World Happiness Index or the Human Development index which measures life expectancy and others.
The key concept outlined in chapter 9 was the basics of Macroeconomics. Macroeconomics is the study of the economy as a whole. Later, in this unit the other significant factors, tools and techniques used by finance ministers and governments are outlined and are clearly shown how each of the factors, tools or techniques affect the overall economy. In this chapter however the concept that was mentioned countlessly was GDP. GDP has been used to measure the overall production of all resources produced within the country and however, has been adapted to show prosperity and well being. On the other hand GDP isn't made to measure prosperity but rather other indexes or like the World Happiness Index or the Human Development index which measures life expectancy and others.
Chapter 10 - The Business Cycle and Fiscal Policy
Key Concept
The most prominent concept outlined in chapter 10 was the business cycle. The business cycle easily outlined the different phases of the cycle and set the base for chapters 11 and 12 which go into detail as to how the governments react to different economic phases.
The most prominent concept outlined in chapter 10 was the business cycle. The business cycle easily outlined the different phases of the cycle and set the base for chapters 11 and 12 which go into detail as to how the governments react to different economic phases.
Chapter 11 - Money and Banking
Key Concept
The Canadian Banking System was one concept that was small but very important. The Canadian Branch banking system is to prevent any corporations or even wealthy families to create banks to loan money to people like the unit banking system in the US. In the US any wealthy family or corporation if they please they are able to start a bank. In Canada the branch banking system restricts the number of banks operating in the country but allows the existing banks to establish as many branches as they please. The branch banking system gives the government greater control over how the banks operate as there are much fewer banks operating. The unit banking system in the US doesn't have as much control over the banks as each can be independent.
The Canadian Banking System was one concept that was small but very important. The Canadian Branch banking system is to prevent any corporations or even wealthy families to create banks to loan money to people like the unit banking system in the US. In the US any wealthy family or corporation if they please they are able to start a bank. In Canada the branch banking system restricts the number of banks operating in the country but allows the existing banks to establish as many branches as they please. The branch banking system gives the government greater control over how the banks operate as there are much fewer banks operating. The unit banking system in the US doesn't have as much control over the banks as each can be independent.
Chapter 12 - Monetary Policy
Key Concept
I felt that the most important concept of chapter 12 was the different tools of the Monetary policy. The overnight rate, operating band and the bank rate are the tools that are used to moderate the economy. The overnight rate is the rate that banks charge one another and the operating band is the midpoint between the bank rate and the overnight rate. These rates are able to affect the economy between two basic policies, which are tight money policy and easy money policy. Tight money policy is when interest rates are increased slowing down inflation, whereas the easy money policy is used when there is decreased inflation. The tight money policy is used typically in the times of high economic growth when people are spending a lot more than they should (used in the Expansion phase in the business cycle) and the the easy money policy is used in the times of low economic growths thus making money cheaper to obtain evidently trying to stimulate the economy (used in the recession phase in the business cycle).
The macroeconomics unit was the one that I found most interesting as I was able to learn how the economy is able to operate as well as how governments and banks help to regulate the economy to keep sufficient and steady growth. In unit 3 the economy was simplified to the point where I was able to understand the terms as well as why the government and banks take certain action in each phase of the business cycle. When I view the news nowadays I am now able to understand the terminology that is used and formulate my perspective/opinions.
I felt that the most important concept of chapter 12 was the different tools of the Monetary policy. The overnight rate, operating band and the bank rate are the tools that are used to moderate the economy. The overnight rate is the rate that banks charge one another and the operating band is the midpoint between the bank rate and the overnight rate. These rates are able to affect the economy between two basic policies, which are tight money policy and easy money policy. Tight money policy is when interest rates are increased slowing down inflation, whereas the easy money policy is used when there is decreased inflation. The tight money policy is used typically in the times of high economic growth when people are spending a lot more than they should (used in the Expansion phase in the business cycle) and the the easy money policy is used in the times of low economic growths thus making money cheaper to obtain evidently trying to stimulate the economy (used in the recession phase in the business cycle).
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