Unit 3: Activities 1-5 Flashcards
What are macroeconomics?
- “Macro” means large
- Macroeconomics studies large economic issues (ex. An entire country’s economy)
GDP…
- Gross Domestic Product
- Measures production in Canada only – whether the production is by Canadian-owned or foreign-owned companies.
- Most commentators consider GDP a better measure of a country’s performance.
- Since 1986, Canada has used the concept of GDP to measure its economic output.
GNP…
- Gross National Product measures the total value of all final goods and services produced by Canadian-owned firms in Canada and anywhere in the world.
- Gross National Product WOULD NOT measure the production of a Japanese-owned auto plant in Canada; however, conversely, GNP WOULD measure the production of a Canadian-owned plant in Japan.
Why are only final goods included in the GDP?
If goods and services were calculated into GDP before part of a final product, many would be counted twice and give an inaccurate number.
For example, if a load of lumber was calculated then everything made out of the lumber would also be counted, therefore resulting in the same material being counted double.
Why is knowing the GDP important?
- Compare what Canada produced last year with what Canada produced this year
- Determine if Canadian production increased or decreased
- Compare Canada’s production with production in other countries
Expenditure Approach vs Income Approach…
The expenditure approach adds the total expenditures on goods and services produced.
The income approach calculates the total income received as a result of producing those same goods and services.
Because both are measures of the same thing they both yield the same total
4 broad categories of total spending on all goods and services produced…
- Spending done by consumers on goods and services (excludes new homes)
- Spending by governments on goods and services
- Spending done by businesses on capital goods (or inventories)
- Net exports (exports-imports)
Economic Growth:
how much a country’s economy has expanded from one year to the next
GDP per capita…
- dividing the total real GDP by the country’s population provides an average income for each person living in that country.
- the average can easily swayed up or down based on a small percentage of the population that have significantly higher or lower income
Drawbacks of GDP…
-Population size
not fixed; use GDP per capita to avoid this issue
-Non-market production isn't measured
volunteer work, homemaker
-Underground economy
leaves no paper trail
-Leisure
not taken into account
-Environmental degradation
negative effects not taken into account
-Distribution of income
unevenGPI…
Genuine progress indicator
- Can be used instead of GDP to calculate our quality of life because it includes costs that contribute, positively or negatively, to our well-being but don’t necessarily have economic value
- Takes into account any work done that isn’t for money, clean up of pollution as well as negative effects like pollution and crime
CIW…
Canadian Index of Well being
Provides Canadians with a fuller picture of wellbeing that measures real life, for real people
Unemployment rate:
in Canada, it is the percentage of people in the total labour force without jobs but willing to work and actively seeking employment
Frictional unemployment:
workers moving between jobs, including recent student graduates who are looking for work
Seasonal unemployment:
workers who lose jobs due to changes in climate
-Fishers, farmers, construction workers, and golf club workers
Structural unemployment:
why workers lose jobs when the make-up of the economy changes in a region.
-when a manufacturing plant closes, a mine closes, or a fishing industry terminates
Cyclical unemployment:
results from a reduction in overall consumer spending; as overall demand for goods and services declines in all industries, fewer workers are needed in all industries
-Great Depression
