ECON 1BB3 Lecture Notes - Automotive Products, Truism, Deflation

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Chapter 12
They want more money supply because they are getting off the gold standard after 1950s
That is why inflation rapidly
Gold standard: takes away the freedom of just printing money
Deflation is bad for economy: princes going down bad for economy as a whole
Good for individuals: buy more stuff (possibly)
But not for big prices
Sucha buying a car
Deflation make people wait for the cheaper price
o People save and not consume
o Increase unemployment
Chapter 12
Why does some country have trade deficits?
Net Exports: (trade balance): = exports imports
Exports: made domestically and sold abroad
Import: good and services that are produced abroad and sold domestically
Happens in Canada for truism: export
Happens abroad: import
What affects the trade balance?
Prices (foreign/ domestic) Buy more foreign goods because price of their goods are cheaper
Taste (foreign/ domestic goods): maybe other coutnries goods taste better, therefore, we
import
Exchange rates
Income (foreign/ domestic)
Foreign income increase, exports increase
Government trade policies (affects how much you want to buy)
Transportation costs
Which industry is largest in terms of Canadian exports?
a) Energy products (second least)
b) Industrial goods and materials
c) Machinery and equipment
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