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BBC > Economics & Basic Finances > Flashcards

Economics & Basic Finances Flashcards

1
Q

Explain demand

A

Consumers demand more when prices decrease

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2
Q

Explain supply

A

Manufacturers supply more when prices increase

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3
Q

5 point in economic cycle in order

A

Peak
Contractions
Trough
Recovery
Expansion

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4
Q

2 measures the government uses to control the economy

A

Monetary
Fiscal

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5
Q

Who controls monetary policy

A

Bank of Canada
Apolitical
Appointed

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6
Q

Who controls fiscal policy

A

Elected officials
Budgets

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7
Q

3 measures used with monetary policy to control the economy

A

Interest rates
Money supply
Government securities

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8
Q

3 measures used in fiscal policy to control economy

A

Taxation
Regulation
Government spending

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9
Q

What is CPI

A

Stats can -Basket of 600 goods and services
- checks different regions
- measures rate of change monthly
Raw score of 100

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10
Q

Inflation calculation

A

Current CPI - previous CPI / previous CPI

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11
Q

Core inflation consists of

A

Everything but volatile items, energy and food
* other factors affect these I.e. hurricane

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12
Q

2 measures of inflation

A

CPI
GDP

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13
Q

Unemployment calculation

A

unemployed/

Labour force. X100

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14
Q

Bank rate

A

Rate bank of Canada lends to chartered banks

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15
Q

Overnight rate

A

Rate that banks lend to each other.

25 basis points less than bank rate

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16
Q

What is the target rate that the bank announces

A

Overnight rate

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17
Q

Prime rate

A

Rate bank gives best borrower

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18
Q

Rule of 72

A

72/rate of return = # of yrs to double

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19
Q

5 leading indicators

A

Durable goods orders
Housing starts
Commodity prices
Manufacturing new orders
Stock Market returns

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20
Q

6 concurrent indicators

A

Income
Retail Sales
Industrial Production
Manufacturing sales volume
Non agricultural payroll
GDP

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21
Q

3 ways of measuring GDP

A

Product output approach
Expenditure
Income

22
Q

Nominal versus real GDP

A

Nominal is with inflation, real is without

23
Q

Not included in gdp

A

Transfer payments I. E. EI

24
Q

5 Lagging indicators

A

Unemployment duration
Inventory levels
Personal credit to income ratio
Private sector capital investments
Exchange rate
Inflation

25
Q

CPI trim

A

Removes 20% highest and lowest inflationary items

  • less volatile
26
Q

Deflation

A

Negative

Very bad

27
Q

Disinflation

A

Slowing

28
Q

Stagflation

A

High interest rate and high unemployment together

29
Q

Reflation

A

Recovery

30
Q

What does increasing interest rates do to the economy

A

Slows growth

31
Q

What does increasing the money supply do to the economy

A

Spur economy out of recession

32
Q

What does reducing government securities do to the economy

A

Encourage investors to go more risky and boost economy

33
Q

Bank rate

A

Bank of Canada lends to chartered banks 3.5

34
Q

Overnight rate

A

Banks lend short term to each other, target rate

  • 25 basis points below bank rate
35
Q

Prime rate

A

Bank rate to best customer

Set individually by each bank

36
Q

Quantitative easing

A

Central Bank purchases government securities to lower interest rate and increase money supply

37
Q

5 c of credit

A

Collateral
Character
Capacity
Capital
Conditions

38
Q

2 top factors in credit rating

A

35%. Bill payment
30% how much you owe
15% length of history

39
Q

Good credit score

A

660-725

40
Q

Credit card needed for good credit

A

750 +

41
Q

2 Canadian credit reporting agencies

A

Transunion
Equifax

42
Q

Basics of R scores

A

R0 no data
R1 missed 1st payment
R2 - R5 goes up every 30D
R6 nothing
R7 special pay arrangement
R8 repossessions
R9 bankruptcy

43
Q

What R score show big problems

A

R5 +

44
Q

Hard hit

A

Looking for new credit, one per quarter is okay

45
Q

Soft hit

A

Ie landlord, job, yourself
No impact

46
Q

Bad thing to do with cc

A

Borrow over 50% consistently

47
Q

GDS formula

A

Mtg or rent+prtx+htg+50 cd/
Gross m fam income

48
Q

What is max GDS that CMHC will accept

A

39

49
Q

TDS formula

A

Dbt+car+mtg+ ptx+htg+50cd/
Gross monthly family income

50
Q

Typical limit for TDS

A

40 - 45%

51
Q

Are spousal and child support factored into TDS

A

Yes

52
Q

YMPE #

A

66,600

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