CHAPTER 4 | OVERVIEW OF ECONOMICS Flashcards
Canada’s interactions with the rest of the world which are captured here in the current account and capital account.
balance of payments
The recurrence of periods of expansion and recession in economic activity. Each cycle is expected to move through five phases – the trough, recovery, expansion, peak, contraction (recession). Given an understanding of the relationship between the business cycle and security prices an investor or fund manager would select an asset mix to maximize returns.
business cycle
Statistical data that, on average, change at approximately the same time and in the same direction as the economy as a whole.
coincident indicators
Price index which measures the cost of living by measuring the prices of a given basket of goods. Is often used as an indicator of inflation.
Consumer Price Index
A type of inflation that develops due to an increase in the costs of production. For example, an increase in the price of oil may contribute to higher input costs for a company and could lead to higher inflation.
cost-push inflation
The amount of unemployment that rises when the economy softens, firms’ demand for labour moderates, and some firms lay off workers in response to lower sales. It drops when the economy strengthens again.
cyclical unemployment
A sustained fall in prices where the consumer price index is negative.
deflation
The quantity demanded of a good or service based on a particular price during a given period. The lower the price, the higher the demand.
demand
A type of inflation that develops when continued consumer demand pushes prices higher.
demand-pull inflation
Individuals that are available and willing to work but cannot find jobs and have not made specific efforts to find a job within the previous month.
discouraged workers
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
Statistics or data series that are used to analyze business conditions and current economic activity. See also leading, lagging, and coincident indicators.
economic indicators
A social science that is concerned with an understanding of production, distribution, and consumption of goods and services.
economics
The price at which the quantity demanded equals the quantity supplied.
equilibrium price
The price at which one currency exchanges for another.
exchange rate
A finished product, one that is purchased by the ultimate end user.
final good
Unemployment that results from normal labour turnover, from people entering and leaving the workforce and from the ongoing creation and destruction of jobs.
frictional unemployment
The value of all goods and services produced in a country in a year.
gross domestic product
A generalized, sustained trend of rising prices.
inflation
The proportion of the loan calculated as interest that is payable by the borrower. Also referred to as the cost of credit.
interest rates
