#1: Basic Economic Understanding
Two Economic Assumptions:
People act in their own self-interest
People make informed decisions
Five Key Characteristics of a Pure Market Economy:
Private Property Rights
#6: Gross Domestic Product
Drawbacks to GDP:
Population Size: If the population of a country changes significantly over a few years, the measurement and
comparison of GDP can be misleading. To remove the effect of population change on a countrys GDP, they
#7: Labour Market and Unemployment
Labour Force: The total of all Canadians holding jobs plus all those actively seeking work.
Unemployment Rate: The percentage of the labour force that is not working at any given time; the total number
of Canadians unemp
#5: The Labour Market Why Make Yourself Scarce?
Businesses have a demand for labour
People have a supply of labour
What determines a persons Income?: The supply and demand for their human capital.
Changes in Relative Scarcity:
A product becomes more sca
#4: Production, Firms and the Market
Profit: The Bottom Line!
Excess of revenues (sales) over expenses (costs)
Incentive to producers
Least expensive source for expansion (companies use profits and invest back into the company)
Gauge of business succe
#2: Economic Systems, Production and Government
Economic System: Set of laws, institutions and common practices that help a nation determine how to use its
scarce resources to help satisfy the wants and needs of its people.
The three types of economic sys
#3: Business Organization and Finance
Types of Industrial Activity:
Primary Industry: Harvesting resources or raw materials.
Ex. Mining, lumber
Secondary Industry: Processing raw materials into final or semi-processed goods.
Ex. Manufacturing chairs out o
#8: The Business Cycle and Fiscal Policy
Aggregate Demand (AD): The total demand for all goods and services produced in the economy.
Aggregate Supply: (AS): The total supply of all goods and services produces in the economy.
Full Employment Equ
# 9: Money and Banking
Money: Anything generally acceptable in an economy to purchase goods and services.
Double Coincidence of Wants: The problem of barter; for a trade to occur both parties must want what the other
is willing to trade.
#15: Trade Theory, Agreements and Patterns
Globalization: The creation of a world economy caused by increased international trade, investment flows and
the spread of multinational companies.
Absolute Advantage: The capacity of one economy to pr
#16: Financing International Trade
Export: An international transaction in which a foreign currency is converted into a domestic one in order to
purchase a domestic good; also called a receipt.
Import: An international transaction in which a do
#14: The Environment and Sustainable Development
Carrying Capacity: Environmental term referring to the number of people that the Earths resources can support
indefinitely if those resources are managed effectively.
Drawing Down: Environmental
#13: Effects of Poverty and Poverty-Reducing Strategies
Measuring Poverty in Canada:
Absolute Poverty: State of utter destitution; lack of food, safe water, shelter. This is rare in Canada thanks to the
social safety net (welfare, food banks).
#10: The Role of Government
Deregulation: The opening of a market to more competition by eliminating government regulations originally
put in place to limit competition.
Welfare State: A philosophy that government should intervene to help peopl
#11: The Bank of Canada and Monetary Policy
The Bank of Canada:
The Bank of Canada was founded in 1934 by the Parliament of Canada, during the height of the Great
It was created to help stabilize the Canadian economy and provide security for
#12: Equity and Income Distribution
Equity: fair and just distribution of income within an economy.
Human Development Index (HDI): A United Nations measurement of a countrys achievements in three aspects
of human development: life expectancy, l