Mar 17, 2014
Amazon is planning to produce a smartphone.
Is Canada's inflation rate too low?
- Describe the camera reported to be included with Amazonís higher end smartphone.
- Describe the market for smartphones.
- What will happen to the demand for other smartphones if Amazon enters the market?
- Will Amazon make an economic profit in the long run on its smartphone? Why or why not?
- Draw a diagram to illustrate your answer to #5.
Questions: Canada's inflation rate
- Which country is the "classic example in the modern era" of deflation?
- Why does the lack of a rising price level suggest that Canada's output gap is continuing to grow or is not closing?
- What effect does an "unusually bitter winter" and disappointing growth in the global economy have on Canada's economy?
- What effect do you think very low inflation will have on the Bank of Canada's monetary policy decisions? Why?
- Draw a diagram to show the effect of the "unusually bitter winter" and disappointing growth in the global economy on Canada's output gap.