Chapter 3 Overview of Economics

Question 1

How do you calculate Unemployment Rate?

Answer 1

The Number of Unemployed In Labour /Labour Force

Question 2

How do you calculate Participation Rate?

Answer 2

Labour Force / Total Population

Question 3

3 Factors that contribute to growth in GDP

Answer 3

-Technological advances
-Population growth
-Improvements in training, education, and skills

Question 4

What do lagging indicators tell us about the economy and the business cycle

Answer 4

Lagging indicators may confirm that a change in the business cycle is occurring.

Question 5

How do you calculate Inflation?

Answer 5

CPI Current Year- CPI Previous Year) / CPI Previous Year x 100

Question 6

What is the impact on the Canadian dollar and Canadian interest rates if the U.S. raises its interest rates?

Answer 6

Interest Rates will Increase, Dollar Value will Decrease

Question 7

What is a Trade Surplus

Answer 7

Selling (exporting) More than Buying(importing)

Question 8

What is Trade Deficit

Answer 8

Buying more than selling

Question 9

What is a Current Account consist of? Give 3 examples

Answer 9

Goods and Services sold to foreigners:
Purchase of Product
Interest Paid on Bond
Dividend Paid On Stock

Question 10

What are the two balance of payments?

Answer 10

1. Current Account
2. Capital and Financial Account

Question 11

What phase does demand start to outstrip capacity?

Answer 11

Peak

Question 12

Identify a “soft landing”

Answer 12

When economic growth slows sharply but does not turn negative, while inflation falls or remains low.

Question 13

Fixed Asset examples?

Answer 13

Not likely to be converted in to cash quickly, includes land, buildings and equipments

Question 14

Current liabilities?

Answer 14

Short-term debt