And our economic welfare depends, in large measure, on how well and how swiftly we adjust to such changes in economic circumstances. The past three and a half years have been marked by a significant improvement in Canada's terms of trade. This has also been a period of particularly intense adjustment.
I want to talk about this adjustment process and the link to our standard of living. I will begin by drawing attention to the distinction that must be made, in an open economy, between real income and real output.