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17 Cards in this Set
- Front
- Back
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Why is measuring national economic performance important?
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1) helps governments on tax policy and spending priorities.
2)measures the effect of economic policies 3) measures allow us to compare our economy to the economies of other countries 4) looks at the role of impact of specific industries on the whole economy 5)unions and wage earners use economic measures to contract negotations 6) individuals use economic measures to help them make economies decisions. |
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What is GDP?
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Gross Domestic Product - is the total market value of all final goods and services produced within a country within a year.
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What are the 2 ways GDP can be calculated?
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The expenditure apporach and the income approach.
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What is the expenditure approach?
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to add up the total that is spent on all final goods and services in a year
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What is the income approach?
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to add up all the income that is earned by the different factors of production (wages, rent, interest, profit) in producing the final goods and services.
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How do you avoid multiple counting?
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by counting the cost of the goods being purchased for final use
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What is the formula for the expenditure approach?
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it's GDP = C+G+I+(X-M)
C= consumption G= government purchase I= investment (X - M) = net exports in Canada |
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What is consumption?
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expenditure of household goods and services in household:
durable goods: goods that last a long time (e.g. cars) semi durable goods: i.e clothings but don't last as long as durable goods. non durable goods: goods that are consumed rapidly (e.g. food, gas) services: (hair cuts, eating out) |
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What are government purchases?
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expenditure on goods and services by all levels of government i.e. wages to employees, office supplies and public captial goods
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What are investment?
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are the purchase of new captial goods for the use in the production process i.e. construction for new buildings and changes in business inventories.
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What is CPI?
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CPI is a consumer price index
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What is structual unemployment?
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occurs when the skills or locations of workers no longer matches the patterns of demand in the economy. I.e unemployment in the 1990's in Atlantic Canada with the shutdown of Cod fishery due to declining fish stocks.
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What is Technological Unemployment?
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results from industries using more technologies in the production process and thus reducing the need for workers.
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What is Replacement Unemployment?
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results as firms move labour intensive production to other countries where labour rates are lower. Thus workers producing in other countries replace local Canadian labour.
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What Frictional Unemployment?
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results from people moving in between jobs. Includes students who are graduating from school, workers moving from one job to another - natural in an economy.
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What is Cyclical Unemployment?
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results from decline in consumer spending. As over all demand for goods and services decline in all industries, fewer workers are needed in all industries. E.g. the great depression in 1930
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What is seasonal Unemployment?
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caused by variational in climate over the course of the year such as fishing, farming , construction and recreational camps
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