Chapter 1 Understanding Evolving Economics

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Bank of Canada

Canada's central bank, which has as its objective to "promote the economic and financial well-being of Canada"

recession

a decline in GDP that lasts for at least two consecutive quarters

supply curve

a graph showing the quantity of a good or service that a business will make available at various price.

demand curve

a graph showing the quantity of a good or service that people are willing to buy at various prices

oligopoly

a market structure in which a few firms produce most or all of the output and in which large capital requirements or other factors limit the number of firms

perfect (pure) competition

a market structure in which a large number of small firms sell similiar products, buyers and sellers have good information, and business can be easily opened or closed

pure monopoly

a market structure in which a single firm accounts for all

monopolistic competition

a market structure in which many firms offer products taht are close substitutes and in which entry is relatively easy

mixed economies

economies that combine several economic systems; for example, an economy in which the government owns certain industries but the private sector owns others.

entrepreneurs

people who combine the inputs of natural resources, labour, and capital to produce goods or services with the intention of making a profit or accomplishing a not- for0 profit goal.

bonds

securities that represent long-term debt obligations(liabilities) issued by corporations and governments

frictional unemployment

short-term unemployment that is not related to the business cycle

national debt

the accumulated total of all of the federal governments annual budget deficits

economic system

the combination of policies, laws and choices made by a nation's government to establish the systems that determine what goods and services are produced and how they are allocated

knowledge

the combined talents and skills of the workforce

federal budget defict

the condition that occurs when the federal government spends more for programs than it collects in taxes

full employment

the condition when all people who want to work and can work have jobs

fiscal policy

the governments use of taxation and spending to affect the economy

capital

the inputs, such as tools, machinery, equipment, and buildings, used to produce goods and services and get them to the customer

monetary policy

the measures taken by the Bank of Canada to regulate the amount of money in circulation in order to influence the economy

circular flow

the movement of inputs and outputs among households, businesses, and governments; a way of showing how the sectors of the economy interact

market structure

the number of suppliers in a market

unemployment

the percentage of the total labour force that is actively looking for work but is not actually working

equilibrium

the point at which quantity demanded equals quantity supplied

supply

the quantity of a good or service the businesses will make a available at various prices

demand

the quantiy of a good or service that people are willing to buy at various prices

factors of production

the resources used to create goods and services, including natural resources, labour, capital, entrepreneurship and knowledge

inflation

the situation in which the average of all prices of goods and services is rising

crowding out

the situation that occurs when government spending replaces spending by the private sector

economics

the study of how a society uses scarce resources to produce and distribute goods and services

Micro economics

the sub-area of economics that focuses on individual parts of the economy such as households or firms.

Macro economics

the sub-area of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies, or products

gross national product GNP

the total market value of all final goods and services produced by a country regardless of where the factors of production are located

gross domestic product GDP

the total market value of all final goods and services produced within a nation's borders in a year

expansionary policy

the use of monetary policy by the Bank of Canada to increase the growth of the money supply

contractionary policy

the use of monetary policy by the Bank of Canada to tighten the money supply by selling government securites or raising interest rates

purchasing power

the value of what money can buy

structural unemployment

unemployment that is caused by a mismatch between available jobs and the skills of available workers in an industry ir region; it is not related to the business cycle

seasonal unemployment

unemployment that occurs during specific seasons in certain industries

cyclical unemployment

unemployment that occurs when a downturn in the business cycle reduces the demand for labour throughout the economy

business cycles

upward and downward changes in the level of economic activity

natural resources

Commodities that are useful inputs in their natural state

market economy

an economic system based on competition in the marketplace and private ownership of the factors of production (resources) ; also known as the pricate enterprise system or capitalsim

command economy

an economic system in which the basic industries are owned either by the government or by the private sector under strong government control

socialism

an economic system in which the basic industries are owned either by the private sector under strong government control.

economic growth

an increase in a nation's ouput of goods and services

consumer price index CPI

an index of the prices of a "shopping basket" of goods and services purchased by consumers

producer price index

an index of the prices paid by producers and wholesalersfor various commodities such as raw materials, partially finished goods, and finished products

labour

economic contributions of people

cost-push inflation

inflation that occurs when increases in production costs push up the prices of final goods and services

demand- pull inflation

inflation that occurs when the demand for goods and services is greater than the supply


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