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Chapter 2

COMMERCE 1B03 Chapter 2: Chapter 2: pg 6

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Rita Cossa

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Understanding Canada’s Economic System
Key Economic Indicators
Gross Domestic Product
Total value of goods and services produced in a country in a given year
GDP indirectly reflects
Level of employment
Productivity (goods and services)
Efficiency (education and processes)
Productivity in Canada
Canadian economy = service economy
Increase in productivity due to technological improvements which has decreased production
costs business people are eager to increase productivity
Productivity in the Service Producing Sector
Today’s productivity measure sin the service-producing sector fails to capture the improvement
in quality caused by new technology
Hospitals have CAT scans, PET scanners they may improve patient care but they do
not necessarily increase the number of patients a doctor can see
Frictional unemployment people who have quit and not yet found a job
Structural unemployment caused by company restructuring, a mismatch between the skills of
employees, or location of jobs
Cyclical unemployment due to a downturn in the economy
Seasonal unemployment demand for labour varies during the year
Price Index
Indicates the health of the economy by measuring the levels of inflation, disinflation, deflation,
and stagflation.
Inflation a general rise in the prices of goods and services over time
Disinflation: a situation in which price increases are slowing (the inflation rate is declining)
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