Economics and the Canadian Economy Flashcards

The price of a product goes up while supply stays the same. According to the law of demand, what usually happens?

Answer: The quantity demanded goes down

The law of demand says that, all else being equal, buyers purchase less of a product when its price rises. Price and quantity demanded move in opposite directions.

Which institution sets Canada's key policy interest rate to keep inflation under control?

Answer: The Bank of Canada

The Bank of Canada is the country's central bank. It sets the policy interest rate and aims to keep inflation at about 2%.

What does Gross Domestic Product (GDP) measure?

Answer: The total value of all final goods and services produced in a country in a period

GDP is the total market value of all final goods and services produced within a country's borders over a period of time, usually a year or a quarter. It is the main measure of the size of an economy.

A government taxes imported goods to protect businesses at home. What is this tax called?

Answer: Tariff

A tariff is a tax on imported goods. It makes imports more expensive, which helps domestic producers compete. A quota limits the quantity of imports, and a subsidy is a payment to producers.

What is the name of the trade agreement between Canada, the United States, and Mexico that replaced NAFTA in 2020?

Answer: CUSMA

The Canada–United States–Mexico Agreement (CUSMA, called USMCA in the U.S.) took effect on July 1, 2020, and replaced NAFTA. CETA is Canada's trade agreement with the European Union.

Prices across the economy rise steadily over time. What is this called?

Answer: Inflation

Inflation is a general rise in prices over time, which lowers how much a dollar can buy. In Canada it is measured with the Consumer Price Index (CPI). Deflation is a general fall in prices.