Exam 3: Economics: The Framework for Business

Balmy Beachfront Bed and Breakfast loses money due to a sharp drop in the number of guests during the winter months. If Balmy's demand curve is like most demand curves, one way to attract more guests would be to offer lower rates during the off-season.

What are the four fundamental rights of capitalism? Include an example of each to support your answer.

What do we call a market structure with many competitors selling virtually identical products?

Gross domestic product (GDP) includes the value of output produced within a nation even if that output is produced by a foreign-owned company.

Two factors that will have real impact on the Canadian economy going forward are the Canadian dollar and the low price of oil on the world market.

It is important that any government examine multiple measures of its own economic health, rather than simply relying on one or two dimensions.

What do you call a period of robust economic growth and high employment, which indicates that businesses are capitalizing on new market opportunities?

Explain how the Bank of Canada can use the reserve requirement to influence interest rates and the availability of loans. Why is the Bank of Canada reluctant to make frequent changes in the reserve requirement?

Cyclical unemployment results from layoffs during recessionary periods.

Inflation occurs as the average prices of goods and services rise.

When comparing a socialist system with a capitalist system, what would be one difference of the socialist system?

What happens when the cost of acquiring funds from the Bank of Canada is low?

By the end of the 1980s, communism began to collapse in the Soviet Union and its satellite nations.

What is an economic system a structure for?

Privatization is an important element of the movement toward a greater market orientation in many nations.

What is the measurement for the amount of goods and services produced by an economy divided by the number of resources used to make those goods and services?

What does the consumer price index (CPI) measure?

Define the differences and similarities between the command economies of socialism and communism.

What is the Bank of Canada primarily responsible for conducting?

What does the M2 money supply include?