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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
CPI trim
Removes 20% highest and lowest inflationary items * less volatile
26
Deflation
Negative Very bad
27
Disinflation
Slowing
28
Stagflation
High interest rate and high unemployment together
29
Reflation
Recovery
30
What does increasing interest rates do to the economy
Slows growth
31
What does increasing the money supply do to the economy
Spur economy out of recession
32
What does reducing government securities do to the economy
Encourage investors to go more risky and boost economy
33
Bank rate
Bank of Canada lends to chartered banks 3.5
34
Overnight rate
Banks lend short term to each other, target rate * 25 basis points below bank rate
35
Prime rate
Bank rate to best customer Set individually by each bank
36
Quantitative easing
Central Bank purchases government securities to lower interest rate and increase money supply
37
5 c of credit
Collateral Character Capacity Capital Conditions
38
2 top factors in credit rating
35%. Bill payment 30% how much you owe 15% length of history
39
Good credit score
660-725
40
Credit card needed for good credit
750 +
41
2 Canadian credit reporting agencies
Transunion Equifax
42
Basics of R scores
R0 no data R1 missed 1st payment R2 - R5 goes up every 30D R6 nothing R7 special pay arrangement R8 repossessions R9 bankruptcy
43
What R score show big problems
R5 +
44
Hard hit
Looking for new credit, one per quarter is okay
45
Soft hit
Ie landlord, job, yourself No impact
46
Bad thing to do with cc
Borrow over 50% consistently
47
GDS formula
Mtg or rent+prtx+htg+50 cd/ Gross m fam income
48
What is max GDS that CMHC will accept
39
49
TDS formula
Dbt+car+mtg+ ptx+htg+50cd/ Gross monthly family income
50
Typical limit for TDS
40 - 45%
51
Are spousal and child support factored into TDS
Yes
52
YMPE #
66,600

BBC (1 decks)

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