Macroeconomics Overview Quiz

GDP does not account for social costs or environmental degradation.

Per Capita GDP is calculated by dividing GDP by the population, and it is useful for comparing living standards over time.

The employment rate is calculated as (Number Unemployed / Labour Force) x 100.

<p>One major drawback is that it does not include underemployed workers.</p> Signup and view all the answers

<p>Statistics Canada conducts a monthly survey of households to calculate the unemployment rate.</p> Signup and view all the answers

<p>The GDP growth rate signifies the economic growth of a country and is calculated using the formula: $\frac{(real\ GDP\ year\ 2 - real\ GDP\ year\ 1)}{real\ GDP\ year\ 1} \times 100$.</p> Signup and view all the answers

<p>Comparing GDP can be complicated because a significant population increase may occur without a corresponding rise in output per person, as illustrated by the example of a 4% population growth with only a 2% GDP increase.</p> Signup and view all the answers

<p>Non-market production, such as unpaid labor like childcare, is not measured in GDP, meaning GDP may underestimate the overall contributions to society's welfare.</p> Signup and view all the answers

<p>The underground economy can lead to underreporting of economic activity, with estimates suggesting that up to 20% of GDP may be unaccounted for due to unofficial transactions.</p> Signup and view all the answers

<p>The inclusion of all types of goods, such as weapons, can weaken the perception of GDP as a measure of well-being because it may reflect harmful exports instead of positive contributions to society's welfare.</p> Signup and view all the answers

<p>Aggregate Demand represents the total demand for all goods and services in society.</p> Signup and view all the answers

<p>An increase in consumer income typically leads to higher consumption, which shifts Aggregate Demand to the right.</p> Signup and view all the answers

<p>The main components of the GDP equation are Consumption (C), Investment (I), Government Spending (G), and Net Exports (X-M).</p> Signup and view all the answers

<p>An increase in government spending shifts Aggregate Demand to the right, while a decrease shifts it to the left.</p> Signup and view all the answers

<p>Higher interest rates generally decrease investment spending as the potential for profit diminishes.</p> Signup and view all the answers

<p>Rising domestic inflation can reduce export demand as Canadian goods become more expensive compared to foreign goods.</p> Signup and view all the answers

<p>An increase in consumption, often driven by higher income or lower taxes, can shift the Aggregate Demand curve to the right.</p> Signup and view all the answers

<p>Frictional unemployment refers to temporary unemployment during job transitions or when entering the workforce. It is considered natural because it results from the constant flow of job creation and destruction.</p> Signup and view all the answers

<p>Structural unemployment emerges from a mismatch between job skills and job requirements, often due to technological changes or competition. Unlike frictional unemployment, it typically lasts longer and requires more significant adjustment.</p> Signup and view all the answers

<p>Cyclical unemployment is caused by fluctuations in economic output and spending. It is likely to be highest during economic recessions when businesses reduce their workforce.</p> Signup and view all the answers

<p>Seasonal unemployment occurs due to the predictable seasonal changes in demand for certain jobs within specific industries. This leads to temporary layoffs as the need for labor fluctuates throughout the year.</p> Signup and view all the answers

<p>Full employment is the highest reasonable level of employment achievable in an economy, defined by the natural unemployment rate, which includes both frictional and some structural unemployment. It typically indicates an unemployment rate of 6% to 7% in Canada.</p> Signup and view all the answers

<p>A younger population tends to create higher frictional unemployment due to a greater number of job seekers entering the labor market, while an older population generally results in lower frictional unemployment.</p> Signup and view all the answers

<p>Factors contributing to structural change include shifts in technology, competition, wage policies like minimum wages, and the overall demand for different skills. These factors can create long-term unemployment for those whose skills are no longer needed.</p> Signup and view all the answers

<p>Minimum wages and efficiency wages can contribute to unemployment by setting a wage floor that may exceed the market-clearing wage, leading to a surplus of labor. This can create a situation where there are more job seekers than available positions.</p> Signup and view all the answers