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Econ nove 5 chapter 12.docx

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Bridget O' Shaughnessy

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 Chapter 12 d) Automotive products (export to the U.S increased recent years) e) Agricultural product (least) Net capital outflow 
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