Question

At one point Canada's GDP was \(\$ 1,800\) billion and its exports were \(\$ 542\) billion. What was Canada's export ratio at this time?

Short answer

Canada's export ratio at this time was approximately 30.11%.

Step-by-step solution

Write down the given values

We are given Canada's GDP and its exports: - GDP: \(1,800\) billion - Exports: \(542\) billion

Calculate the export ratio

To find the export ratio, we need to divide the exports by the GDP, and then multiply the result by 100 to get the percentage: Export Ratio = \(\frac{Exports}{GDP} \times 100\)

Substitute the given values

We can now insert the given values of GDP and exports into our formula: Export Ratio = \(\frac{542}{1,800} \times 100\)

Calculate the export ratio

Divide the exports by the GDP and multiply by 100: Export Ratio = \(\frac{542}{1,800} \times 100 \approx 30.11\) So, Canada's export ratio at this time was approximately 30.11%.

Key concepts

Gross Domestic Product (GDP)

Gross Domestic Product, commonly referred to as GDP, is a monetary measure that represents the market value of all final goods and services produced within a country in a specific period. It serves as a comprehensive scorecard of a country's economic health.
To simplify, imagine a giant balance sheet where every product or service that is produced within a country's borders is added up. This 'balance sheet' for a given time period gives us the GDP.
Understanding GDP is important because:

• It indicates economic growth or decline. An increasing GDP means the economy is doing well.
• It helps in international comparisons, showing how one country is performing economically compared to others.
• It's used by policymakers to plan economic policies.

GDP does not account for the distribution of income among residents of a country, nor does it consider whether the nation's rate of growth is sustainable in the long term. However, it remains a crucial indicator of a country's economic state.

Exports

Exports are goods and services that are produced within a country and sold to buyers in another country. They are a vital part of international trade and contribute significantly to a country's GDP.
Some important aspects of exports include:

• They generate revenue for a country's economy, benefiting companies and employees involved in producing those goods and services.
• Socioeconomic health can be enhanced, as exports encourage industrial production, employment growth, and investments.
• Exports support a positive trade balance, which occurs when a country's exports exceed its imports.

The volume and value of a country's exports can drastically affect its overall economic performance. In the context of our problem, Canada's exports, when compared to GDP, help us understand their contribution to the country's economy.

Percentage Calculation

Percentage calculation is a mathematical process used to express a number as a fraction of 100. It is frequently employed in various fields, including finance, academic assessments, and macroeconomic analysis, to provide a better understanding of proportions.
Understanding how to calculate percentages is crucial because it allows for:

• Comparing quantities and understanding proportions effectively.
• Expressing ratios or probabilities succinctly.
• Calculating increases or decreases in economic data, such as GDP or exports.

For instance, in the solution provided, calculating the export ratio involved using percentage calculation. The formula used was:\[ \text{Export Ratio} = \left( \frac{\text{Exports}}{\text{GDP}} \right) \times 100 \]This step-by-step process not only transformed raw numerical data into a percentage that is easier to interpret but also provided an insight into how significant exports are relative to Canada's overall economic output.