Lesson 4 Chapter 4

Question 1

What is balance of payments?

Answer 1

Is a detailed statement of a country’s economic transactions with the rest of the world over a given period (typically a quarter of a year).

This account records the import and export good and services between Canadians and foreigners as well as net transfers such as for foreign aid.

Also called “trade account.”

Question 2

The five phases of a business cycle:

Answer 2

Recovery
Expansion
Peak
Contraction
Trough

Question 3

What is cyclical unemployment?

Answer 3

Is tied directly to fluctuations in business cycle. It rises when the economy weakens, and workers are laid off in response to lower sales; it drops when the economy strengthens again.

Question 4

What is seasonal employment?

Answer 4

Some industries operate only during part of the year. Therefore employment is only available depending on the season example picking fruits or vegetables.

Question 5

What is Frictional unemployment?

Answer 5

Consists of the normal labor turnover that occurs when people enter and leave the workforce, during the ongoing creation and destruction of jobs. This is a normal part of a healthy economy, it declines when jobs are matched more efficiently to potential workers.

Question 6

What is Structural unemployment?

Answer 6

Reflects a mismatch between jobs and potential workers. It occurred when workers are not able to find work or fill available jobs because they lack the necessary skills, do not live where jobs are available, or decide not to work at the wage rate offered by the market. This type of unemployment is closely tied to changes in technology, international competition, and government policy. It typically lasts longer than frictional unemployment because workers must retrain or possibly relocate to find a job.