Chap 4 Flashcards
When unemployment is low, inflation tends to be______
high
When unemployment is high, inflation tends to be ____
low
The _____________ is a detailed statement of a country’s economic transactions with the rest of the world over a given period.
Balance of Payments
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
Current Account
This account records financial flows between Canadians and foreigners, related to
investments by foreigners in Canada and investments by Canadians abroad.
Capital and Financial account
Inflation that occurs due to shocks from the supply side of the economy is known
as…
Cost-push inflation
In this way, higher and continued demand pushes inflation higher. This state of affairs is called
Demand pull inflation
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.
Disinflation
When unemployment is low, inflation tends to be high; when unemployment is high, inflation tends to be low. This relationship is described by the
Phillips Curve
if Canada buys more goods and services from abroad than it sells, it will run a current account….
deficit
It will need to sell more assets to finance the spending, which means running a capital and financial account….
surplus
A higher Canadian dollar relative to our trading partners makes Canadian exports more….
Expensive
If the Canadian dollar falls, exports will….
Increase
This type of unemployment is tied directly to fluctuations in the business cycle.
Cyclical Unemployment.
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.
Frictional Unemployment
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
Frictional
This type of unemployment reflects a mismatch between jobs and potential workers.
Structural
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
Structural
Frictional
One of the strongest influences on the Canadian exchange rate is the price level of
Commodities
An increase in interest rates does what to the Canadian Dollar
increases the value
A higher Canadian dollar relative to our trading partners makes Canadian exports ________ in foreign markets and makes imports _________ in Canada
More Expensive
Cheaper
