Quiz 3 (P.32-43) Flashcards
Define Canada’s Gross Domestic Product (GDP)
GDP is the dollar value of final goods and services produced within the geographic borders of Canada, by all producers regardless of their ownership, within a quarter or a year.
Define Canada’s Gross National Product (GNP)
GNP is the dollar value of final goods and services produced by Canadian-owned (min 50%) producers only, regardless of their location around the world, within a quarter or a year.
What does GDP NOT include (5)?
GDP does not include: previously produced goods, savings, transfer payments, production without recorded transactions and criminal activity.
Why does GDP trend upward over time (3)?
Population growth, the spread of technology and advancement in quality of technology trends the GDP upward over time.
What are the 4 parts of a business cycle?
Recession/contraction, trough (low point), recovery/expansion, & peak
During a recession, because production (Real GDP) is falling, the unemployment rate will rise quickly. Therefore, the inflation rate will tend to ___, but remain ____ because ___.
The inflation rate will tend to slow down, but remain positive because firms’ demands for input is lower than before so their costs and therefore prices do not rise as quickly.
During a recovery, the unemployment rate will usually rise for the first year or two while discouraged workers are being re-hired, then slowly trend downwards for several years. Once shortages begin to occur, the inflation rate will tend to ___ because ___
The inflation rate will tend to accelerate because production costs and prices will rise more quickly.
What is nominal GDP?
Nominal GDP is the value of the current year’s output at the current year’s prices.
What is Real GDP?
Real GDP is the current output valued at the base year’s prices.
How do we calculate Real GDP?
Nominal GDP/Price Index Current Year X 100
