Macroeconomics Overview

The total value of goods and services produced in an economy, adjusted for changes in prices. Real GDP removes the effect of inflation on the nominal GDP, allowing for a more accurate comparison of economic output over time.

The total value of goods and services produced in an economy, calculated using current prices. Nominal GDP is useful for capturing the current economic activity, but it doesn't adjust for inflation, so it's less accurate for comparing output over time.

A measure of the average change in prices of all goods and services included in GDP. It's used to calculate real GDP by adjusting for inflation.

A measure of the average change in prices of all goods and services included in consumer spending, used to adjust nominal consumption expenditure to real consumption expenditure in GDP.

A theoretical economic model that depicts the relationship between the aggregate supply and demand in an economy. It shows how the overall price level and output are determined in the market.

The percentage of the labor force not working, calculated as the number unemployed divided by the labor force * 100.

Includes everyone aged 15-64 who are employed or unemployed.

The total number of people aged 15-64, including those in the labor force and those not in the labor force.

Those not in the labor force who are not employed and don't meet the criteria for unemployed.

Workers who are employed but are underutilized, either working part-time or at a job below their skills.

People who are unemployed and have stopped looking for work.

The economic measure that receives the most attention in Canada, representing the percentage of the labor force that is not working.

A country could have a high GDP but also a high level of environmental degradation.

The increase in the natural unemployment rate, often due to structural changes in the economy, like the shift from manufacturing to services, and reforms to unemployment insurance.

The opportunity cost of searching for a job, which is lower when unemployment benefits are available, leading to a higher natural unemployment rate.

The difference between the potential GDP that could be produced if unemployment was at the natural rate and the actual GDP produced.

A formula that estimates the size of the GDP gap, stating that for every 1% increase in the actual unemployment rate above the natural rate, the GDP gap increases by 2%.

Persistent increase in the general price level of goods and services.

Persistent decrease in the general price level of goods and services.

A measure of the average price level of a basket of consumer goods and services, used to track inflation.

Income redistribution caused by unexpected inflation or deflation, favoring either employers or employees depending on the situation.

The total demand for all goods and services in an economy.

The level of GDP that occurs at a specific price level.

An increase in AD shifts the curve to the right, indicating higher demand at every price level.

A decrease in AD shifts the curve to the left, indicating lower demand at every price level.

Consumer spending, which is the largest component of AD, is influenced by factors like income, taxes, savings, and imports.

Higher investment spending, driven by positive profit expectations and low interest rates, shifts AD to the right.

Increased government spending or transfer payments boost AD, while decreased spending reduces AD.

Higher inflation makes Canadian exports more expensive, reducing demand. Currency depreciation makes Canadian exports cheaper, increasing demand.

Unemployment caused by the time it takes workers to find new jobs or their first jobs. It's a natural part of a dynamic economy, with people constantly entering and leaving the workforce.

Unemployment due to a mismatch between the skills workers have and the skills employers need. It can result from technological advancements or changes in the global economy.

Unemployment related to economic downturns. It occurs when businesses reduce their operations and lay off workers during recessions or economic slowdowns.

Unemployment that occurs due to the seasonal nature of certain industries or occupations. For example, some jobs in tourism or agriculture are only needed for specific parts of the year.

The highest level of employment that an economy can realistically achieve. It includes both frictional and some structural unemployment.

A key factor influencing the natural unemployment rate. Economies with younger populations tend to have higher levels of frictional unemployment as more individuals seek jobs.

A factor affecting the natural unemployment rate. Large-scale changes in technology or industry can lead to structural unemployment as workers need to adapt their skills.

A factor influencing the natural unemployment rate. Policies like minimum wages or efficiency wages can create unemployment by pricing some workers out of the labor market.

A period of economic decline lasting more than two consecutive quarters, marked by rising unemployment, slow or negative GDP growth, and low or falling prices.

A severe and prolonged recession characterized by a sharp decline in GDP, extremely high unemployment rates, and persistent deflation.

Any factor that removes money from the circular flow of income in an economy. Common examples include taxes, savings, and imports.

Any factor that injects money into the circular flow of income in an economy. Common examples include government spending, investment spending, and exports.

The state where the total value of leakages in an economy equals the total value of injections. This represents a point of economic equilibrium where the economy is neither growing nor shrinking.