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1

Microeconomics

The sub-area of economics that focuses on individual parts of the economy, such as households or businesses.

2

Macroeconomics

The sub-area of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies, or products.

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Factors of
Production

The resources used to create goods and services, including natural resources, labour, capital, entrepreneurship, and knowledge.

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Natural resources

Commodities that are useful inputs in their natural state.

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Labour

Economic contributions of people

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Capital

The inputs, such as tools, machinery, equipment, and buildings, used to produce goods and services and get them to the customer

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Entrpreneurs

People who combine the inputs of natural resources, labour, and capital to produce goods and services with the intention of making a profit or accomplishing a not-for-profit goal.

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Entrepreneurial thinking

Thinkjng like an entrepreneur - even those who work in a company

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Knowledge

The combined talents and skills of the workforce

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Circular flow

The movement of inputs and outputs among households, businesses, and governments;a way of showing how the sectors of the economy interact

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Economic system

The combination of policies, laws, and choices made by a nation's government to establish the systems that determine what goods and services are produced and how they are allocated.

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Market economy

An economic system based on competition in the marketplace and private ownership of the factors of production (resources); also know as the private enterprise system or capitalism.

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Command economy

An economic system characterized by government ownership of virtually all resources and economic decision making by central government planning; also known as planned economy and central planning.

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Socialism

An economic system in which the basic industries are owned either by the government or by the private sector under strong government control

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Mixed economics

Economics that combine several economic systems; for example, an economy in which the government owns certain industries but the private sector owns others

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Market structure

is the number of suppliers in a market.

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Perfect (pure) competition

A market structure in which a large number of small businesses sell similar products, buyers and sellers have good information and businesses can be easily opened or closed.

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Demand

The quantity of a good or service that people are willing to buy at various prices.

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Demand curve

A graph showing the quantity of a good or service that people are willing to buy at various prices.

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Supply

The quantity of a good or service that businesses will make available at various prices or a given price.

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Supply curve

A graph showing the quantity of a good or service that a business will make available at various prices.

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Equilibrium

The point at which quantity demanded equals quantity supplied

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Economic growth

An increase in a nation's output of goods and services

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Gross domestic product (GDP)

The total market value of all final goods and services produced within a nation's borders in a year.

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Gross national product (GNP)

The total market value of all final goods and services produced by a country regardless of where the factors of production are located

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Business cycles

Upward and downward changes in the level of economic activity

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Recession

A decline in GDP that lasts for at least two consecutive quarters

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Full employment

The condition when all people who want to work and can work have jobs.

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Unemployment rate

The percentage of the total labour force that is actively looking for work but is not actually working

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Frictional employment

Short term unemployment that is not related to the business cycle

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Structural unemployment

Unemployment that is caused by a mismatch between available jobs and the skills of available workers in an industry or a region; it is not related to the business cycle

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Cyclical unemployment

Unemployment that occurs when a downturn in the business cycle reduces the demand for labour throughout the economy.

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Seasonal unemployment

Unemployment that occurs during specific seasons in certain industries

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Inflation

The situation in which the average of all prices of goods and services is rising.

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Purchasing power

The value of what money can buy. When prices rise, purchasing power falls.

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Demand-pull inflation

Inflation that occurs when the demand for goods and services is greater than the supply

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Consumer price index (CPI)

An index of the prices of a "shopping basket" of goods and services purchased by consumers

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Producer price index (PPI)

An index of the prices paid by producers and wholesalers for various commodities such as raw materials, partially finished goods and finished products

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Bank of Canada

Canada's central bank, whose objective is the economic and financial well-being of Canada by creating a social balance of growth, employment, and price stability

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Monetary policy

The measures taken by the bank of Canada to regulate the amount of money In Circulation in order to influence the economy

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Contractionary policy

The use of monetary policy by the Bank of Canada to tighten the money supply by selling government securities or raising interest rates

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Expansionary policy

The use of monetary policy by the Bank of Canada to increase the growth of the money supply

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Fiscal policy

The government's use of taxation and spending to affect the economy. Reducing taxes or increasing spending stimulates the economy; raising taxes or decreasing spending does the opposite.

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Federal budget deficit

The condition that occurs when the federal government spends more for programs than it collects in taxes. It must borrow funds.

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National debt

The accumulated total of all of the federal government's annual budget deficits

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Crowding out

The situation that occurs when government spending replaces spending by the private sector

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Bonds

Securities that represent long term debt obligations (liabilities) issued by corporations and governments

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Relationship management

The practice of building, maintaining, and enhancing interactions with customers and other parties to develop long-term satisfaction through mutually beneficial partnerships

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Strategic alliance

A cooperative agreement between companies; sometimes called a strategic partnership

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Economics

The study of how a society (individuals, businesses and governments) uses scarce resources to produce and distribute goods and services

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Three sectors of the economy are

the individual, business and government sectors and they are linked by a series of two way flows. The government provides goods & services for the other two sectors and receive income in the form of taxes. changes in one flow affects the other sectors.

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the world's main economic systems

are market economies (capitalism), command (planned) economies, socialism, and mixed economies.

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Monopolistic competition

many companies sell close substitutes in a market that is fairly easy to enter.

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oligopoly

a few companies produce most or all of the industry's output. An oligopoly is also difficult to enter, and what one company does will influence others.

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Pure monopoly

there is a single seller in a market.

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microeconomic concepts

When the price increases, the quantity demanded falls but the quantity supplied rises. A price decrease leads to increased demand but a lower supply. At the point where the quantity demanded equals the quantity supplied, demand and supply are in balance. The equilibrium point is achieved by market adjustments of quantity and price.

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a nation's economic health

a nation's economy is growing when the level of business activity, as measured by GDP, is rising.

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four types of unemployment

frictional, structural, cyclical and seasonal unemployment.

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price stability

when prices are stable, the overall prices of goods and services are not moving either up or down very much.

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rate of inflation

is measured by changes in the CPI and the PPI.

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Two causes of inflation

demand-pull and cost-push If the demand exceeds supply, prices rise or higher production costs increase the final prices of goods and services.

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Three major trends

are lack of confidence in the markets, meeting competitive challenges, and increasing entrepreneurship worldwide.

63

Lack of confidence in markets caused by

the European crisis of 2011, US reluctance to pursue fiscal responsibility and slow global economic recovery.