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  1. Macroeconomics: The overall view of economy and economic activities.
  2.  
  3. We measure our economy because it is to show the stability and instability of our economy.
  4.  
  5. GDP is the measure of all spendings of that country in a year
  6.  
  7. GDP Expenditure approach: Totaling the spendings on goods and services used. C+I+G+(X-M)
  8. GDP Income Approach: Totaling the income received on goods and services used.
  9.  
  10. The problem with multiple counting was that the material purchased to build the good or services is also being
  11. counted again in the final product/services. Therefore, it is counted twice.
  12.  
  13. C: CONSUMER SPENDINGS
  14. I: INVESTMENTS
  15. G: GOVERNMENT SPENDINGS
  16. X: TOTAL NET EXPORTS
  17. M: TOTAL NET IMPORTS
  18.  
  19. GNP is the old way to calculate the wealth of Canada. It takes the Income and value of all goods and services being
  20. offered.
  21.  
  22. Real GDP growth rate is when the GDP is taken out of its inflation.
  23.  
  24. GDP PER CAPITA is the removing of the effect of the population onto the GDP
  25.  
  26. Nominal GDP is the gdp that has not been adjusted for inflation
  27. GDP Deflator is the factor that takes out of the inflation rate.
  28.  
  29. Some economists believe that the Gross Domestic Product (GDP) is not an accurate measurement of a country’s growth. GDP is merely a sum of national spending with no distinctions
  30. between transactions that add to well-being and those that diminish it. GDP counts the sale of alcohol, cigarettes, and pollution-producing goods as part of the production growth of a
  31. country. Fees associated with gambling, fees associated with divorce lawyer fees, and legal costs associated with crime all drive the GDP upward. Government expenditures on new
  32. prisons also increase the GDP.
  33.  
  34. Underground Economy is the under the table approach of purchasing that are not included in gdp
  35.  
  36. GPI is another way to measure standards of living
  37.  
  38. CIW is an index that is a better measurement of quality of life in Canada
  39.  
  40. Unemployment is the percentage of people in the labour force that are unable to find a job
  41.  
  42. it is calculated by Unemployment in labour force/labour force
  43. Underemployment: this rate makes no distinction between part-time and full-time employment.
  44. Discouraged Workers: this rate does not take into account people who, are discouraged by unable to find work.
  45. Dishonesty: People responding to Stat Canada’s labour market survey may state that they are actively seeking work, when they really are not.
  46.  
  47. Full employment: no cyclical unemployment exists, but frictional, and structural exists.
  48. Natural rate of unemployment (lowest possible rate ) exists with no inflationary pressures (stable inflation)
  49.  
  50. Okun’s Law – for every 1% rise in the unemployment rate above the rate defined as full employment output falls by 3%
  51.  
  52. Inflation: the general rise of prices.
  53.  
  54. Calculating CPI is the difference between the CPI in the new year and the base year which is 100 in 1992. It is
  55. 100 because it is the start of the year where the prices have not been affected by inflation.
  56. How to calculate CPI: take a basket of goods (600) from each of the 8 major components each year and other basic classes and
  57. track the prices every compounding period.
  58.  
  59. Major components
  60. 1. Food
  61. 2. Shelter
  62. 3. Household operations and furnishings
  63. 4. Clothing and footwear
  64. 5. Transportation
  65. 6. Health and personal care
  66. 7. Recreation, education and reading
  67. 8. Alcoholic beverages and tobacco products
  68.  
  69. Indexing CPI
  70.  
  71. CPI year 1 / CPI Year 2 = Wage year 1 / Wage Year 2
  72.  
  73. Limitations of the CPI
  74. 1. Consumer Differences – individual consumption patterns do not always match those of the typical urban household.
  75. 2. Changes in Spending patterns – Stats Canada surveys Canadians regularly, however changes in consumption patterns are ongoing and gradual – eg. DVD players & cell phones.
  76. 3. Product Quality – the index can’t reflect changes in quality that are unmatched by changes in price. Thus, the standard of living may increase, but this will not be reflected in the CPI.
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