Part 4 – Glossary of Terms
  • Building Permits: The total value of new construction for which permission is granted.
  • Business Investment: Expenditure geared at expanding business activities. This may be in the form of new resources added to the business, or it may be resources generated by the business in past periods, being re-invested into the business for expansion purposes. Investments can be in the form of fixed assets such as plant or machinery and equipment, or may be in a more liquid form such as stock or cash.
  • Composite Index: A composite index is an aggregate measure which can be used to represent the performance of the economy or business. In Canada, the composite index is made up of six broad sets of variables, each of which contribute to a single number which is indicative of the level of economic activity. The six variables included in the Canadian composite index (leading indicator index) are housing, business and personal service employment, TSE300, money supply, US composite index, a number of variables on the performance of the manufacturing sector, and retail sales. The index is published monthly by Statistics Canada, and gives a good reading on how the economy has performed before actual data is available.
  • Consumer Demand: The total value of goods and services which are purchased by consumers during a specified time period.
  • Consumer Price Index (CPI): A measure of price movements produced by Statistics Canada and obtained by comparing the retail prices of a representative “shopping basket” of goods and services at two different points in time. In Canada the CPI is produced on a monthly basis.
  • Dependency ratio: The proportion of non-working population to working population.
  • Dutch Disease: This is an economic concept that tries to explain the seeming relationship between the exploitation of natural resources and a decline in the manufacturing sector. The theory is that an increase in revenues from natural resources will result in a contraction and de-industrialization of a nation’s economy by raising the exchange rate, which makes the manufacturing sector less competitive.
  • Economic Recession: A decline in the level of economic activity as measured broadly by Gross Domestic Product (GDP) for at least two consecutive quarters.
  • Economy: A geographic boundary in which goods and services are produced and exchanged between producers and consumers using an accepted medium of exchange.
  • Economic sectors: The goods and services produced in an economy are classified and grouped according to the process of production used to provide them. Products which are similar and require similar processes for production are usually grouped together in what is called an economic sector. For example, cars and cement are grouped as manufactured goods. They were produced by transforming raw materials into a good which can be used by consumers either as a final product or to be used in the production of other goods and services.
  • Employed labour force: This describes the total number of employed persons who are a part of the labour force.
  • Employment rate: The percentage of total population who are eligible to work and are actually employed.
  • Goods producing sector: Economic sectors are also grouped according to the type of products produced. Broadly, they can be grouped in terms of tangible and non-tangible products. Tangible products are products which are visible and usually bulky such as minerals or agricultural products. Sectors producing these products are usually termed goods producing sectors, and include the agriculture, mining, manufacturing and construction sectors. The other broad grouping is known as the service sector and produces mainly services which are more non-tangible in nature. Sectors such as distribution, warehousing and transportation are included in the services sector.
  • Gross Domestic Product (GDP): This describes the value of total goods and services produced by an economy in a given period of time. GDP can be expressed in current values (nominal GDP) or in a value adjusted for price change between two specified periods, called real GDP. The change in real GDP is referred to as the growth in GDP, the growth in the economy or economic growth. When the change is positive, it is also referred to as economic expansion. Negative changes are referred to as economic contraction or simply a decline in GDP/the economy.
  • New Housing Price Index: A price index used to track the changes in contractors’ selling price of new housing unit.
  • Housing Starts: Housing units where construction has advanced to a stage where full (100%) footings are in place. In the case of multiple structures, this definition of starts applies to the entire structure.
  • Inflation: A sustained rise in the general price level as measured by the CPI. Core inflation measures the changes in consumer prices, which result from “normal" economic activities. It excludes short term price shocks which can distort longer term price trend. In Canada, this measure of inflation excludes eight of the most volatile components in the inflation basket (16 per cent) such as energy and selected foods, as well as indirect taxes.
    Headline inflation: refers to the change in consumer price at a given time of the year (usually month) relative to the corresponding time (month) of the previous year.
    Cost push inflation: An increase in consumer prices resulting from an increase in the cost of production.
    Demand-pull inflation: An increase in the price of consumer goods and services which occurs when demand for goods and services in higher than the supply of goods and services.
  • Interest rate: The rate of return on money.
  • Labour force: The total number of persons of working age who are available for work, capable of working, and are either gainfully employed or seeking employment during a specified time period.
  • Liquidity: This relates to the ease or convenience with which an asset can be converted from one form to another without loss of value. Cash is considered the most liquid form of financial asset.
  • Macroeconomic Environment: This is the broadest area of influence in an economy. It defines the broad rules, regulations, policies, etc. which create an environment in which economic activities take place. It defines the boundaries and the do’s and don’ts in an economic system.
  • Median Age: The age falling in the middle of a given a list or a sample of different ages arranged in numerical order is called the median age. It represents the point where 50% of the data points lie either above or below.
  • Monetary Policy: The use of monetary and financial tools (usually by the central bank) to effect desired changes to the economy. The tools most commonly used are interest rates, bank reserves through alterations of discount rates, open market sales and purchase of securities and change in reserves requirements.
  • NAICS: North American Industrial Classification System.
  • Non-residential Assessment: Current value assessment (CVA) for properties in the commercial and industrial property classes.
  • Population: The total number of persons residing in a given geographic area at a specified time.
  • Residential Assessment: Current value assessment (CVA) for properties in the residential assessment and farmlands property classes.
  • Retail Sales: The value of total goods purchased by consumers from retail stores within a given time period.
  • Taxable assessment: Current Value assessment for all taxable properties in the seven property classes used to determine municipal and education tax rates.
  • Unemployment rate: The percentage of the labour force that is unemployed.

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