ECON midterm study

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  1. Inflation rate
    %by which the CPI has increased the nominal GDP

  2. Nominal GDP
    GDP reflecting current inflation rate

  3. Real GDP
    GDP in base year dollars, stripping out inflation.

  4. Single most important indicator of an economy's health
    Productive Growth
  5. High productivity growth=
    a rapidly growing standard of living.
  6. Productivity=
    Output(GDP)/factor inputs (labour, captal etc.)
  7. Determinants of productivity growth
    • Physical capital
    • human capital, including entrepreneurship
    • land and natural resources
    • technological knowledge

    Y/L=A*F(1, K/L, H/L, N/L)
  8. Explain the productivity slowdown
    computer technology is not productive/investment in computer technology is not intended to boost productivity

    productivity gains from technological breakthroughs are delayed by several decades

    the capital stock of computers is too small to have much of an impact on productivity

    productivity gains have been realized but standard economic statistics have not captured these gains
  9. Frictional unemployment
    short-term unemployment associated with job search
  10. Structural unemployment
    long-term unemployment due to skill shortages or an unwillingness to re-locate
  11. Seasonal unemployment
    only work available certain times of the year
  12. cyclical (demand-derived) unemployment
    extra unemployment created during economic slowdowns
  13. NAIRU
    Non-Accelerating Inflation Rate of Unemployment

    Natural rate of unemployment. The long-run expected or normal rate of unemployment
  14. Five influences of unemployment rates
    minimum wage laws


    efficiency wages

    job search

    employment insurance programs
  15. Natural rate of unemployment in Canada
    5.5%-6.5% approx.
  16. Financial markets
    • The bond market
    • The stock market
    • financial intermediaries
  17. For the economy as a whole, savings=
  18. Prices of goods and services in canada have
    risen every ear since 1933, with the exception of 1953
  19. prices of goods and services in USA have
    risen every year since 1933 with the exceptions of 1938, 1939, 1949, 1955 and 2009
  20. The price level in canada began accelerating rapidly in
    the 1970s but leveled off in the 1990s
  21. Canadian inflation rates for the most part
    mimick those in the USA
  22. Current inflation rates for
    • 0.8%
    • 1.5%
    • -0.1%
  23. Labour force participation; men and women since 1976
    Men dropped slightly, women rose significantly
  24. unemployment duration since 1976
Card Set
ECON midterm study
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