Mar 17, 2014

Amazon is planning to produce a smartphone.

Is Canada's inflation rate too low?

Questions: Amazon

  1. Describe the camera reported to be included with Amazonís higher end smartphone.
  2. Describe the market for smartphones.
  3. What will happen to the demand for other smartphones if Amazon enters the market?
  4. Will Amazon make an economic profit in the long run on its smartphone? Why or why not?
  5. Draw a diagram to illustrate your answer to #5.

Questions: Canada's inflation rate

  1. Which country is the "classic example in the modern era" of deflation?
  2. Why does the lack of a rising price level suggest that Canada's output gap is continuing to grow or is not closing?
  3. What effect does an "unusually bitter winter" and disappointing growth in the global economy have on Canada's economy?
  4. What effect do you think very low inflation will have on the Bank of Canada's monetary policy decisions? Why?
  5. Draw a diagram to show the effect of the "unusually bitter winter" and disappointing growth in the global economy on Canada's output gap.



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