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

The export ratio of Canada at this time was approximately 30.11%.

Step-by-step solution

Identify the given values

From the problem statement, we have: - GDP of Canada = $1,800 billion - Exports of Canada = $542 billion We will use these values to calculate the export ratio.

Use the export ratio formula

According to the formula: Export Ratio = (Exports / GDP) * 100% Let's calculate the export ratio: Export Ratio = \(\frac{542}{1800}\) * 100%

Calculate the export ratio

Multiply the fraction by 100%: Export Ratio = \(\frac{542}{1800}\) * 100% Export Ratio ≈ 30.11% So, at this time, Canada's export ratio was approximately 30.11%.

Key concepts

Understanding GDP

Gross Domestic Product (GDP) is one of the most closely watched indicators in macroeconomics, encapsulating the total value of all goods and services produced over a specific time period within a country's borders. It is a comprehensive measure, accounting for consumption, investment, government spending, and net exports. The figure for Canada's GDP being \(\$ 1,800\) billion indicates the scale of the country's economy within the given time frame.

Simplifying the concept, imagine GDP as the size of an economy's 'pie'. The larger the pie, the more resources and economic activities are present within the nation. In teaching the concept of GDP, one effective approach is to highlight its components and explain how they add up to the total economic output. It's clear why students need to understand GDP: it provides a bird's-eye view of the economic health of a country.

The Role of Exports in an Economy

Exports, representing goods and services sent from one country to another, play a critical role in an economy. They are a primary source of revenue for many countries and are crucial for the balance of trade. In the case of Canada, with exports amounting to \(\$ 542\) billion, we can perceive a significant portion of the national economy is driven by foreign demand for Canadian products and services.

Understanding exports requires recognition of their dual role: they contribute to GDP while also serving as a barometer for international economic competitiveness. Explaining exports in a classroom setting often involves discussions on comparative advantage, international trade agreements, and the influence of global market dynamics on a nation's export capacity.

Macroeconomics Fundamentals

Macroeconomics is the study of the performance and structure of an economy as a whole. It encompasses various concepts, including GDP and exports, but also delves into inflation, employment levels, national income, and much more. Macroeconomics provides valuable insights into how different economic factors are interrelated and influence one another.

A fundamental underpinning in macroeconomics is the use of indicators such as the export ratio to gauge an economy's health. The export ratio of 30.11%, calculated in the original exercise, signifies that a substantial proportion of Canada's economic activity is tied to the global market. When explaining macroeconomic concepts, it's important to contextualize figures like the export ratio within the broader economic narrative, giving students a clearer understanding of the complex web of economic interactions.