Sociology 323

Economy & Society

February 7 – Jim Stanford Part 4

Video About Money

The Money Myth

Question From Previous Class -

Gender Wage Gap

Wage Gender Gap ControversyCanadian ParliamentStatistics CanadaWages - Pipelines

Overview of Midterm Exam

The midterm exam will consist of 3 parts.

1. Definitions – Answer 10 of 112. Short answer – Answer 2 of 33. Essay Questions – Answer 1 of 2

Time allocated for each part.

1. Definitions – Answer 10 at 5 minutes = 50 min2. Short answer – Answer 2 at 7.5 minutes = 15 min3. Essay Questions – Answer 1 at 15 minutes = 10

min

Total = 75 minutes

Overview of Midterm Exam

You need to study:

Coursepack – Karl Polanyi: The Great Transformation, Chapter 4 and 5

Book – Jim Stanford: Economics for Everyone, Part 1 – 4

Power Point Lectures available at:

http://erikchevrier.ca/course/economy-and-society

Examples of Questions

Definitions:

DepreciationExternalities Transfer Payment

Short answer:

Please name 4 out of the five activities performed by profit seeking companies that are socially useless.

Essay question:

What does Karl Polanyi think of Adam Smith's view that the division of labour in a society is dependent upon the existence of markets?

Money and Banking

Modern money comes in many shapes and sizes:

- Currency- Deposits- Credit

Money has many economic uses:

- Means of payment- Unit of account- Store of value- Facilitates exchange

Money is important to capitalism. In capitalism:

- Accumulating money became the goal of production

- In initiating production, new money is created- Private-profit seeking financial institutions

control the creation and destruction of money

Money

A Simple Hierarchy of Money (Perry G Mehrling)

Inflation, Central Banks and Monetary Policy

Price Level – Overall level of absolute prices in a society.

Inflation – Increase in the overall level of absolute prices in a society.

Deflation – Decrease in the overall level of absolute prices in a society.

Nominal wages – wages measured in dollars.

Real wages – purchasing power of wages. Accounts for inflation and deflation.

You can measure inflation with various measures like the Consumer Price Index

Causes of Inflation

The following factors can lead to inflation:

1 – Demand-Pull Inflation – Results from excess spending

2 – Higher labour costs

3 – Higher profits

4 – Rise in raw material costs

5 – Can be self-fuelling

Central banks try to control inflation through monetary policy

Bank of Canada

Bank of Canada Video

Monetary vs Quasi-Monetary Policies

Stock Markets, Financialization and

PensionsIn order for companies to grow, they need investments to maintain their fixed and working capital expenses.

These can come in the form of:

– Loans– Bonds– Equities

Finance capital has become a major factor in the world economy.

Pension Plans

Pay-as-you-go planPre-fundedDefined contribution