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Inflation rate
%by which the CPI has increased the nominal GDP
[P(P2-P1)/P1]*100%
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Nominal GDP
GDP reflecting current inflation rate
y*P=Y
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Real GDP
GDP in base year dollars, stripping out inflation.
Y/P=y
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Single most important indicator of an economy's health
Productive Growth
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High productivity growth=
a rapidly growing standard of living.
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Productivity=
Output(GDP)/factor inputs (labour, captal etc.)
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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)
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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
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Frictional unemployment
short-term unemployment associated with job search
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Structural unemployment
long-term unemployment due to skill shortages or an unwillingness to re-locate
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Seasonal unemployment
only work available certain times of the year
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cyclical (demand-derived) unemployment
extra unemployment created during economic slowdowns
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NAIRU
Non-Accelerating Inflation Rate of Unemployment
Natural rate of unemployment. The long-run expected or normal rate of unemployment
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Five influences of unemployment rates
minimum wage laws
unions
efficiency wages
job search
employment insurance programs
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Natural rate of unemployment in Canada
5.5%-6.5% approx.
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Financial markets
- The bond market
- The stock market
- financial intermediaries
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For the economy as a whole, savings=
investments
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Prices of goods and services in canada have
risen every ear since 1933, with the exception of 1953
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prices of goods and services in USA have
risen every year since 1933 with the exceptions of 1938, 1939, 1949, 1955 and 2009
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The price level in canada began accelerating rapidly in
the 1970s but leveled off in the 1990s
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Canadian inflation rates for the most part
mimick those in the USA
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Current inflation rates for
USA
Canada
Yukon
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Labour force participation; men and women since 1976
Men dropped slightly, women rose significantly
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unemployment duration since 1976
similar
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