First 3 chapters

Question 1

What is economics?

Answer 1

how society manages scarce resources

Question 2

what is land as a resource?

Answer 2

anything from mother nature

Question 3

what is capital as a resource

Answer 3

goods that make other goods

Question 4

what is labour as a resource

Answer 4

all mental and physical human efforts

Question 5

what is a positive statement?

Answer 5

one that can be tested

Question 6

what is a normative statement?

Answer 6

one that is a judgement (how should be)

Question 7

What are the 4 key economic problems?

Answer 7

1) What is produced and how
2) What is consumed and by who
3) why are resources idle
4) is capacity growing?

Question 8

What does gdp measure?

Answer 8

market value of all final goods produced domestically

Question 9

what are the four sectors of the economy measured in gdp?

Answer 9

household consumption, business investments, government spending, exports minus imports

Question 10

does gdp measure used goods?

Answer 10

no

Question 11

what is nominal gdp?

Answer 11

quantity of final goods/services times current prices

Question 12

what is real gdp?

Answer 12

quantity of final goods/services times base year prices

Question 13

what are the 4 phases of the business cycle?

Answer 13

peak, recession, trough, recovery

Question 14

what is potential gdp?

Answer 14

real gdp if all resources were employed (full employment)

Question 15

what is the gap called when potential gdp greater than real gdp?

Answer 15

recessionary gap

Question 16

what is the gap called when potential gdp is less than real gdp?

Answer 16

inflationary gap

Question 17

does inflation cause bracket creep?

Answer 17

yes

Question 18

what is inflation?

Answer 18

rise in the general price level

Question 19

how is inflation measured?

Answer 19

CPI or GDP deflator

Question 20

what is cpi and what does it measure?

Answer 20

consumer price index. it measures the average cost of goods and services purchased by a typical canadian family

Question 21

what are limitations of cpi?

Answer 21

assumes households don’t change consumption when prices change, basket may not represent everyone, new products not included, quality improvements not taken into consideration

Question 22

what is core cpi?

Answer 22

typical basket excluding food, gst/pst, and energy

Question 23

how is cpi calculated?

Answer 23

(price of basket in year / price of basket in base year ) x100

Question 24

what must you be doing to be officially unemployed?

Answer 24

must be actively looking for work

Question 25

how to calculate unemployment rate?

Answer 25

of people unemployed/ labour force

Question 26

what is a discouraged worker?

Answer 26

would like to work but have given up looking

Question 27

what is natural rate of unemployment for canada?

Answer 27

6-8 percent

Question 28

who is the banker to the federal government

Answer 28

bank of canada

Question 29

who distributes bank notes?

Answer 29

bank of canada

Question 30

who is the bank to the major chartered banks?

Answer 30

bank of canada

Question 31

what is the overnight interest rate

Answer 31

the rate banks charge each other for overnight loans

Question 32

what is the upper limit of the operating band?

Answer 32

bank rate. rate chartered banks borrow from the bank of canada

Question 33

what is the lower limit of the operating band?

Answer 33

interest rate paid by bank of canada on deposits with the BoC