1. Sociology 323 Economy & Society February 7 – Jim Stanford Part 4

2. Video About Money The Money Myth

3. Question From Previous Class - Gender Wage Gap Wage Gender Gap Controversy Canadian Parliament Statistics Canada Wages - Pipelines

4. Overview of Midterm Exam The midterm exam will consist of 3 parts. 1. Definitions – Answer 10 of 11 2. Short answer – Answer 2 of 3 3. Essay Questions – Answer 1 of 2 Time allocated for each part. 1. Definitions – Answer 10 at 5 minutes = 50 min 2. Short answer – Answer 2 at 7.5 minutes = 15 min 3. Essay Questions – Answer 1 at 15 minutes = 10 min Total = 75 minutes

5. 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

6. Examples of Questions Definitions: Depreciation Externalities 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?

7. 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

8. Money A Simple Hierarchy of Money (Perry G Mehrling)

9. 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 Consumer Price Index

10. 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

11. Stock Markets, Financialization and Pensions In 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 plan Pre-funded Defined contribution