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ECON 110 (192)
Chapter 19

Chapter 19 Notes

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Queen's University
ECON 110
Ian James Cromb

Chapter 19 Notes 1) A) The value of total production of goods and services in Canada is called its national product. National product and national income are equal because all production generates a claim on its value in the form of income. B) In measuring Canada’s total output, it would be meaningless to add together all goods and servies produced during one year (i.e., 50,000 trucks plus 14 million dozen eggs plus 100 million haircuts, etc.) Instead, total output is measured in gross domestic product (GDP). C) The difference between nominal national income and real income is that with the latter prices are held constant to enable us to see changes in quantity. D) If all of Canada’s resources—it’s land, labour, and capital, are being employed at normal levels of utilization, then we say that Canada is producing its potential output. E) The output gap measure the different between potential output and actual output. During booms, actual output is greater than potential output (inflationary gap) and during recession, actual output is less than potential output (recessionary gap). 2) A) The labour force includes people who are employed and people who are unemployed. The unemployment rate is expressed as the number of people who are unemployed as a percentage of people in the labour force. B) At any point in time, some people are unemployed because of the normal turnover of labour (new entrants to the labour force, job leavers, and job seekers). This unemployment is referred to as frictional unemployment. Some people are said to be structurally unemployed beca
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