Ch2- Basic Economics

Question 1

What is an economic crisis?

Answer 1

Businesses and consumers are unable to pay their debt causing a liquidity shortage

Question 2

What is economy?

Answer 2

Financial system of how resources flow through society, from production to distribution to consumption

Question 3

What is economics?

Answer 3

Study of choices we make in a way in which we allocate our resources (scarcity )

Question 4

What is macroeconomics?

Answer 4

Overall situation of a country (the big picture)

Question 5

What is microeconomic ?

Answer 5

Study of a smaller economic unit (individuals and businesses)

Question 6

What are economic indicators?

Answer 6

Gives information about economic health and activity, analyzing past performances to help predict future ones

Comparison +benchmarking

Question 7

What examples of economic indicators and why?

Answer 7

Unemployment : we can see the number of jobs lost and created

Inflation: money and ability to buy goods and services

Question 8

What is monetary policy and who puts it forward?

Answer 8

Put forward by the bank of canada

Manages money supply and how liquid is the money

Reserve requirement (how much money they need to have on hand)

Open market operation (security, bonds and notes)

Question 9

What is fiscal policy and who puts it forward? Give 3 main examples

Answer 9

Budget put forward by the government party

It influences the economy through taxation and spending.
Budget surplus
Budget deficit
Debt

Question 10

What is budget surplus?

Answer 10

When taxes are greater that your spending

Question 11

What is budget deficit?

Answer 11

When taxes are lower than your spending

Question 12

What’s is debt?

Answer 12

All deficit added together

Question 13

What are the 4 main types of economy?

Answer 13

Capitalism, socialism, communism, mixed market

Question 14

What is capitalism?

Answer 14

Free market system based on private ownership and economic freedom

Question 15

What are the fundamental rights of capitalism?

Answer 15

Right to own a business and keep after-tax profit
Right to private property
Right to free choices(buy or not buy)
Right to fair competition

Question 16

What is socialism?

Answer 16

The government controls key industries that need protection or are national interest
+higher taxes to distribute wealth evenly
Cheaper medication and education

Question 17

What is communism?

Answer 17

Economic and political system that calls for public ownership of virtually all enterprise are under the direction of a strong central gouvernment

Question 18

What is mixed market?

Answer 18

Mix of different type of economies, most economies in the world fall under this category

Question 19

What are the four degrees of competition?

Answer 19

Monopoly
Oligopoly
Monopolistic competition
Pure competition

Question 20

What is monopoly?

Answer 20

One single producer controlling the entire economy

It leaves no significant room for competitiors

Question 21

What is oligopoly?

Answer 21

Makes it hard to break into a market, very little price competition(price fixing ) and few sellers

Question 22

What is monopolistic competition?

Answer 22

Many sellers, all are different sizes. Differentiated based on quality,branding, price

Question 23

What is pure competition?

Answer 23

Products sold are nearly identical, the competition. Is purely based on price.
No producer controls the market

Question 24

What is the law of demand?

Answer 24

People will be more willing and able to buy more of a product if the price is lower

Question 25

What is the law of supply?

Answer 25

Suppliers will be willing and able to produce more of a product if the price is higher

Question 26

What is the equilibrium point?

Answer 26

Intersection where the demand curve crosses the supply curve. The quantity supplied is equal to the quantity demanded

Question 27

What is the unemployment rate?

Answer 27

Percentage of people in labour force who are actively seeking work but cannot find a job

Question 28

How do you calculate the participation rate?

Answer 28

(#unemployed/ labour force)*100

Question 29

What is the labour force?

Answer 29

All the members of a particular organization or population who are able to work

Question 30

What is the participation rate?

Answer 30

The number of people who are actively seeking a job

Question 31

What happens when the unemployment rate is low?

Answer 31

The companies need to poach employees, thus the employees have négociation power

Question 32

What are the types of unemployments?

Answer 32

Seasonal
Frictional
Structural
Cyclical

Question 33

What is seasonal unemployement?

Answer 33

Unemployed at a particular time do the year

Ex: ski instructor
Gardener

Question 34

What is a frictional unemployment?

Answer 34

Inevitable delays when Finding a new job, switching jobs

Ex: finding your first job

Question 35

What is structural unemployement?

Answer 35

Mismatch between what companies need and what workers can offer
Ex: typewriter specialist

Question 36

What is cyclical unemployement?

Answer 36

Results directly from cycles of economic upturn and downturn