ECON 140W - Week 1

Class 1 - Jan. 6, 2026

What is Economics?

• Inflation
  • We want this to go back to being boring
• GDP
  • Measure of output in the economy, why it's good, why it's not great for everything
• Unemployment
  • Technically, can't be unemployed as a student
• Monetary policy
  • We should have enough knowledge by the end of the course to write our own monetary report like the Government of Canada does
• Fiscal policy
  • Taxes
  • Spending
  • What is the problem with government debt? Issues/benefits or running a deficit
• Investment
  • Building up a physical investment like a factory
  • Financial investments like bonds, stocks, international foreign currency exchange

Long-Run Trends and Fluctuations

Total GDP, Canada
Recession dates: 1982, 1991, 2008, 2020

Reasons for growth:

• Partly because we're better at producing stuff

Growth rate, GDP, Canada

Reasons for growth:

• When growth rate negative, recession! woohooo

Policy Issues

• Fiscal policy
  • Tax rates, government spending, trade policy
• Monetary policy
  • Interest rates, currency regimes, international finance
• Most policy choices involve tradeoffs
  • Lenders vs. borrowers
    • If interest rates go up, as a lender you make more but borrowers you lose more
  • Homeowners vs. renters
    - When housing prices go up, the $\frac{2}{3}$ of Canadians that own houses are happy
    - This is a reason students have a hard time in EC 140, because there's not much intuition that can be used
  • Short-term - Unemployment vs. inflation (maybe?)
    • If Bank of Canada lowers interest rates which causes more unemployment
  • Long-term - Growth vs. Inequality (maybe?)

Choices Among Alternatives

GNI per capita, 2010 USD

Gini index (inequality)

This ^ is bad, because people in Canada will want to go to USA because they can make more.

Time Horizon and Economic Policy

• What are the key policy issues over:
  • The next 4 months - by the end of the term
    • Not much will change
    • Monetary policy and economic management
  • The next 4 years - during your degree
    • Fiscal policy, government debt and deficits, housing prices
    • Government invests a lot in education
  • The next 40 years or longer
    • Economics growth, productivity, and the future of work

Critical Questions - Housing Market

2008 Financial crisis: Went down by half - led to global recession

• In the past 3 years, housing prices have decreased in Canada but not a global recession because Canada is small

Critical Questions - Youth Unemployment

Has fluctuated around but in October/November has dropped. We're at 15% right now. We have long term decline in unemployment rates with short term inclines.

Sources

• Macroeconomics is about the link between theory and data
• Key data sources in this course:
  • Statistics Canada (https://statcan.gc.ca)
    • Daily releases of new information
  • U.S. Federal Reserve (https://fred.stlouisfed.org)
  • World Bank (https://data.worldbank.org)
• We aren't expected to memorize data, but one of Ken's goals is that we occasionally check to see if our assumptions are correct

Class 2 - Jan. 8, 2026

Population in Canada

Ken thinks Macroeconomics starts in Canada

Population Growth in Canada

Canada does a bad job at tracking population. Canada doesn't know when you left the country.
The spike in 1971 is because they realized that they miscounted really badly.

Canada Inflation Rate - 1915-2023

• During the first world war, Canada started measuring things quite a bit. This is because during wartime, economics goes wild.
• Negative inflation is almost never good. (Post WWI and The Great Depression above).
• Ken won't spend much time talking about pre-1950 when it comes to data because it wasn't amazing and there was 2 world wars, etc.
• There's a big boost in oil control during the 1970s leading to US going off the gold standard and thus high inflation.

Canadian - Unemployment

• Statistics runs a labour survey - they survey 60,000 people and ask them if they are employed and a bunch of questions.
• Unemployment is the fraction of people who want a job and can't have one.
• Global financial crisis didn't directly hit Canada
  • Hit finance industry but they don't really lose their jobs

Core Age Employment and Participation

• The difference between red and blue are loosely unemployment rate.
• Rise up until 1990 is woman entering the workforce

Canadian Interest rates

When there is really low interest rates, people borrow money:

Household Debt

Canada in Comparison with the U.S.

• U.S. is decent comparison but not the only one
• Canada is strongly affected by the United States
• It also never serves as a natural comparison
• We should also look at other countries
  • Common error to act like U.S. is the only Alternatives

GDP per capita - Canada vs. the U.S.

Canada vs. the U.S. - Labour Force

• In 1990s, the dip is due to many factors
• The steady decline since 2010s is baby boomers retiring

The Aging Population