Chapter 19 Flashcards
The value of total production of goods and services in Canada is called its _____. National _____ and national _____ are equal because all production generates a claim on its value in the form of income.
national income, income, product
In measuring Canada’s total output, it would be meaningless to add together all goods and services produced during one year (i.e., 50 comma 000 trucks plus 14 million dozen eggs plus 100 million haircuts, etc.). Instead, total output is measured in _____.
dollars
The difference between nominal national income and real national income is that with the latter, ____ are held constant to enable us to see changes in ______
prices, quantity
If all of Canada’s resource its land, labour, and capital are being employed at normal levels of utilization, then we say that Canada is producing its _____ output
potential
The output gap measures the difference between _____ and _____GDP. During booms ____ and during recessions _____
potential, actual, Y>Y*, Y
The labour force includes people who are ____and people who are _____. The unemployment rate is expressed as the number of people who are _____ as a percentage of people ______
unemployed, employed, unemployed, in the labour force
At any point in time, some people are unemployed because of the normal turnover of labour (new entrants to the labour force, job leavers, and job seekers). This unemployment is referred to as ______.Some people are unemployed because their skills do not match the skills necessary for the available jobs. This employment is referred to as ______.
frictional, structural
Suppose 2002 is the base year in which the price of a basket of goods is set to be 100. If the price of the same basket of goods in 2019 is 137 then we can say that the price level is ____ and that the price of the basket of goods has increased by ____ percent between 2002 and 2019
137, 37
Canada’s CPI in 2016 was 128.4 and in 2017 was 130.4 The rate of inflation during that one-year period was ____ percent
1.6
The price that is paid to borrow money for a stated period of time is known as the _____.
interest rate
The real interest rate is equal to the nominal interest rate ______ the rate of inflation.
minus
The number of Canadian dollars required to purchase one unit of foreign currency is the _____ between the foreign currency and the Canadian dollar.
exchange rate
______ in the exchange rate reflects a depreciation of the Canadian dollar; in the exchange rate reflects an appreciation of the Canadian dollar.
increase, decrease
Explain why people may decide to join the labour force during booms. People may decide to join the labour force during booms because a. there is a decline in productivity and hence an increase in salaries. b. more jobs become available and hence there are more opportunities to find a job c. there is a rise in productivity, hence more workers are required in the labour market. d. there is a decline in productivity and hence an increase in salaries.
b
Explain why the unemployment rate might rise during a boom, even when the level of employment is rising. The increase in _____ reflects the new hiring by firms to produce more output. The increase in _______ reflects an increase in the labour force. If the rise in the labour force ____ (in absolute number) the rise in employment, then the number of unemployed workers will increase.
employment, unemployment, exceeds
During a recession, suppose unemployed workers leave the labour force because they are discouraged about their inability to find a job. What happens to the unemployment rate? The unemployment rate is likely A. to decrease because both number of people unemployed and number of people in the labour force decrease by the same absolute amount. B. not to change because after the recession some workers will return to the labour force. C. not to change because both number of people unemployed and number of people in the labour force decrease by the same percentage. D. to increase because number of people unemployed does not change and number of people in the labour force decreases.
A
”A declining unemployment rate is a clear positive sign for the economy.” Is this statement true or false? A. It is true because there is always a decline in unemployment rate during the periods of rapid economic growth. B. It is false because a rise in national income is associated with rise in productivity, not employment. C. It is false because there can be a decline in unemployment rate during recessions due to discouraged workers. D. It is true because if there are less unemployed people, all the people are materially better off.
C
Consider an imaginary 10-year period over which output per person falls but GDP increases. How can this happen? This is possible if A. the number of people in the corresponding population is stable B. the rate of increase in the other factor of productions is high C. the rate of technical progress is small D. the rate of unemployment is constant
C
Do you think this is likely to be good for the economy? Such a long-term decline in output per person is probably A. undesirable because average living standards will be declining. B. desirable because on average people’s welfare will increase due to increase in GDP. C. highly recommended because after some period of time it enables the economy to implement the latest technologies. D. nonsignificant for the economy because it does not prevent a rise in GDP.
A
When the Canadian dollar depreciates in foreign-exchange markets, many people view this as “good” for the Canadian economy. Who is likely to be harmed by and who is likely to benefit from a depreciation of the Canadian dollar? A depreciation of the Canadian dollar is beneficial for A. sellers of Canadian goods abroad and harmful for Canadian buyers of foreign goods B. Canadian government and harmful for the Canadians. C. Canadas imports and harmful for canadas exports D. all participants of Canadas international trade process
A
Compute the output gap for each year as a percentage of potential output.
Explain how GDP can exceed potential GDP. GDP can exceed potential GDP
A. when capital and land are used less intensivly as normal
B. when labor works overtime
C. when capital, land, and labour are used at their standard rate.
D. only if there are some statistical errors.
B
Does real GDP ever fall in the time period shown?
In the time period shown, _____ falls in real gdp.
there are no
What do economists call such periods?
Economists call the periods when real GDP falls _____
recessions
