Chapter 2 Flashcards
G7/8
is a quasi-organization compromising the world’s major fully developed economies - US, Canada, France, Germany, Great Britain, Italy, Japan, and recently Russia
key factors that are deemed to be critical in ensuring that our economy remains resilient and competitive now and in the future
- productivity gains
- strong business investment
- technological innovation
- moderate wage increases
- favourable currency exchange rate
key economic influencers (2)
- contributing factors to economic development
2. the underlying economic model
3 fundamental principles for an economic system to develop and grow to encourage and foster a climate that promotes and rewards economic risk
1) The law of supply and demand
2) Allowance for private ownership, entrepreneurship, and wealth creation
3) Extent of government involvement in influencing economic activity and direction
refers to the ability of the market, independent of external influencers, to determine the price for which a product or service will be bought and sold -> achieves equilibrium price
supply and demand
these concepts are fundamental in a good economy, had been achieved in US and CAN but still becoming accepted in developing countries
Allowance for private ownership, entrepreneurship, and wealth creation
how can the government influence economic activity and direction?
○ Customer via purchasing G/S
○ Regulator, restricting access or defining competitive boundaries within particular economic sectors
○ Manager via powers granted to Crown organizations (i.e. Bank of Canada)
○ Taxation agent
○ Economic stimulation agent via grant and subsidy programs, infrastructure development programs, and specific industry or company bailout programs
○ Competitor by providing services in direct comp. for private-sector businesses
refers to economic system that adheres to the principles of economic freedom: the law of supply and demand, full and open access to the principles of private ownership, entrepreneurship, and wealth creation, and an absence of regulation on the part of the government
open system
refers to economic systems where the fundamentals of the law of supply and demand , private ownership, entrepreneurship, and wealth creation, are largely restricted or absent, and the government fully controls the economic direction and activity
closed system
refers to an economic system that contains components of both open and controlled systems, includes 3 principles with some degree of centralized economic planning and government regulation and involvement
mixed system
financial institutions regulated under the Canada Bank Act whose primary responsibility is to bring together borrowers and lenders by accepting deposits and lending out money - all in a manner that safeguards the interest of their customers
chartered banks
the purchases you make in support of your day to day economic activity that are deemed to be of value in meeting sustenance needs and in improving your overall quality of life i.e. clothing, food, housing, and transportation
expenditures
dollars you set aside today that will support economic activity and wealth creation in/for the future i.e. RRSP or GIC - these are then lent to others with the intent of stimulating their economic activity in the hopes of enhancing their wealth and private ownership levels
savings
investments that you are making today to further expand your capacity to conduct and expand your productivity and overall economic capacity
capital asset investments
the borrowing of dollars to support expenditures or investments being made. You may need to borrow money to purchase the above-mentioned truck
credit
