Chap 4

Question 1

When unemployment is low, inflation tends to be______

Answer 1

high

Question 2

When unemployment is high, inflation tends to be ____

Answer 2

low

Question 3

The _____________ is a detailed statement of a country’s economic transactions with the rest of the world over a given period.

Answer 3

Balance of Payments

Question 4

This account records the import and export of goods and services between Canadians
and foreigners, as well as net transfers such as for foreign aid. The ___________ is
sometimes called the trade account in the financial press

Answer 4

Current Account

Question 5

This account records financial flows between Canadians and foreigners, related to
investments by foreigners in Canada and investments by Canadians abroad.

Answer 5

Capital and Financial account

Question 6

Inflation that occurs due to shocks from the supply side of the economy is known
as…

Answer 6

Cost-push inflation

Question 7

In this way, higher and continued demand pushes inflation higher. This state of affairs is called

Answer 7

Demand pull inflation

Question 8

is a decline in the rate at which prices rise (I.e., a decrease in the rate of inflation). Prices are still rising, but at a slower rate.

Answer 8

Disinflation

Question 9

When unemployment is low, inflation tends to be high; when unemployment is high, inflation tends to be low. This relationship is described by the

Answer 9

Phillips Curve

Question 10

if Canada buys more goods and services from abroad than it sells, it will run a current account….

Answer 10

deficit

Question 11

It will need to sell more assets to finance the spending, which means running a capital and financial account….

Answer 11

surplus

Question 12

A higher Canadian dollar relative to our trading partners makes Canadian exports more….

Answer 12

Expensive

Question 13

If the Canadian dollar falls, exports will….

Answer 13

Increase

Question 14

This type of unemployment is tied directly to fluctuations in the business cycle.

Answer 14

Cyclical Unemployment.

Question 15

This type of unemployment consists of the normal labour turnover that occurs when people enter and leave the work force, and during ongoing creation and destruction of jobs.

Answer 15

Frictional Unemployment

Question 16

When people are out of work because they recently finished school, having quit a job, having been laid off from a job, or having been fired. This type of unemployment is

Answer 16

Frictional

Question 17

This type of unemployment reflects a mismatch between jobs and potential workers.

Answer 17

Structural

Question 18

This type of unemployment is closely tied to changes in technology, international competition, and government policy. It typically lasts longer
than __________ unemployment because workers must retrain or possibly relocate to find a job

Answer 18

Structural

Frictional

Question 19

One of the strongest influences on the Canadian exchange rate is the price level of

Answer 19

Commodities

Question 20

An increase in interest rates does what to the Canadian Dollar

Answer 20

increases the value

Question 21

A higher Canadian dollar relative to our trading partners makes Canadian exports ________ in foreign markets and makes imports _________ in Canada

Answer 21

More Expensive

Cheaper