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ADMIN-1001 Intro to Canadian Business > Chapter 3 > Flashcards

Chapter 3 Flashcards

Review of Chapter 3

1
Q

Macroeconomics

A

Macroeconomics – country’s overall economy

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2
Q

Microeconomics

A

Microeconomics – consumers, families, and businesses

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3
Q

Fiscal policy

A

Fiscal policy – taxation and spending decisions influence the economy; these decisions are designed to encourage growth, boost employment, and curb inflation

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4
Q

Monetary policy

A

Monetary policy – actions that shape the economy by influencing interest rates and the supply of money; controlled by the Bank of Canada

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5
Q

M1 money supply

A

M1 money supply – all currency – paper bills and metal coins – plus chequing accounts and traveller’s cheques

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6
Q

M2 money supply

A

M2 money supply – all M1 plus most savings accounts, money market accounts, and certificates of deposit (low-risk savings vehicles with a fixed term)

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7
Q

What does the Bank of Canada do?

A

Manages Canada’s monetary policy
Provides banking services for other banks and the government
Coordinates the cheque-clearing process
Maintains the federal government’s chequing account
Keeps the currency supply in good condition

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8
Q

Free market

A

Free market – private ownership, economic freedom, fair competition, and innovation and hard work

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9
Q

Who do businesses offer value to?

A

Businesses offer value to:
Customers
Employees
Suppliers

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10
Q

The Fundamental Rights of Capitalism

A

The right to own a business and keep after-tax profits
The right to private property
The right to free choice
The right to fair competition

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11
Q

Four Degrees of Competition

A
  1. Pure competition
  2. Monopolistic competition
  3. Oligopoly
  4. Monopoly
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12
Q
  • The foundations of a free market

- Interaction of buyers and sellers

A 
The foundations of a free market:
How much can we make/sell?
How much will consumers buy?	
At what price?
Interaction of buyers and sellers:
Impacts prices
Competition
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13
Q

Supply

A

Supply – the relationship between the price of a good and the quantity that sellers are willing and able to offer for sale; sellers tend to supply a greater quantity as the price rises

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14
Q

Supply curve

A

Supply curve – a graph of the supply relationship; the supply curve slopes upward to the right showing that the quantity supplied increases as the price rises

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15
Q

Demand

A

Demand – the relationship between the price of a good and the quantity buyers are willing and can afford to buy; when price falls, consumers tend to buy more

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16
Q

Demand curve

A

Demand curve – a graph of the demand relationship; the demand curve slopes downward showing that the quantity demanded increases as the price falls

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17
Q

Equilibrium Price

A
  • Forces of supply and demand drive equilibrium price
  • The point where supply and demand intersect
  • Market price adjusts to the equilibrium price
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18
Q

Socialism

A

Socialism – the government controls key enterprises; higher taxes designed to distribute wealth through society

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19
Q

Communism

A

Communism – public ownership of all enterprise; strong central government

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20
Q

What kind of market economy is Canada?

A

As a market-dominant economy, the Canadian government still owns/supports the postal service, universities, parks, libraries, health care, education, defence, and public works.

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21
Q

Inflation

A
  • The rate of price changes across the economy is another basic measure of economic well-being.
  • Inflation means that prices are rising.
  • Hyperinflation is when average prices increase more than 50% per month.
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22
Q

Disinflation

A

Disinflation is when price increases slow down.

23
Q

Deflation

A

Deflation is when average prices actually decrease.

24
Q

How does the government measure prices?

A

The government measures prices using the consumer price index (CPI) and the producer price index (PPI).

25
Q

Productivity

A

The relationship between inputs and outputs is productivity.

A high level of productivity correlates with a healthy GDP.

Canada has experienced strong productivity growth due to technology.

26
Q

economy

A

A financial and social system of how resources flow through society, from production, to distribution, to consumption.

27
Q

economics

A

the study of the choices that people, companies, and governments make in allocating society’s resources.

28
Q

macroeconomics

A

the study of a country’s overall economic issues, such as the employment rate, the gross domestic product, and taxation policies.

29
Q

microeconomics

A

the study of smaller economic units such as individual consumers, families, and individual businesses.

30
Q

fiscal policy

A

government efforts to influence the economy through taxation and spending.

31
Q

budget surplus

A

overage that occurs when revenue is higher than expenses is higher than revenue over a given period of time.

32
Q

budget deficit

A

shortfall that occurs when expenses are higher than revenue over a given period of time.

33
Q

federal debt

A

the sum of all the money that the federal government has borrowed over the years and not yet repaid

34
Q

monetary policy

A

Bank of Canada decisions that shape the economy by influencing interest rates and the supply of money.

35
Q

money supply

A

the total amount of money within the overall economy

36
Q

open market operations

A

the Bank of Canada function of buying and selling government securities, which include treasury bonds, notes, and bills

37
Q

bank rate

A

the rate of interest the Bank of Canada charges when it loans funds to banks

38
Q

reserve requirement

A

a rule that specifies the minimum amount of reserves (or funds) a bank must hold, expressed as a percentage of the bank’s deposits.

39
Q

economic system

A

a structure for allocating limited resources

40
Q

Canada Deposit Insurance Corporation (CDIC)

A

a federal Crown corporation that insures deposits in banks and thrift institutions for up to $100,000 per customer, per bank.

41
Q

capitalism

A

an economic system - also known as the private enterprise or free market system-based on private ownership, economic freedom, and fair competition

42
Q

pure competition

A

A market structure with many competitors selling virtually identical products. Barriers to entry are quite low.

43
Q

monopolistic competition

A

A market structure with many competitors selling differentiated products. Barriers to entry are quite low.

44
Q

Oligopoly

A

A market structure with only a handful of competitors selling products that are either similar or different. Barriers to entry are quite high.

45
Q

Monopoly

A

A market structure with one producer completely dominating the industry, leaving no room for any significant competitors. Barriers to entry tend to be virtually insurmountable.

46
Q

natural monopoly

A

A market structure with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones. Most natural monopolies are government sanctioned and regulated.

47
Q

supply

A

The quantity of products that producers are willing to offer for sale at different market prices.

48
Q

demand

A

the quantity of products that consumers are willing to buy at different market prices.

49
Q

equilibrium price

A

the price associated with the point at which the quantity demanded of a product equals the quantity supplied.

50
Q

socialism

A

An economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare.

51
Q

Communism

A

an economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government

52
Q

mixed economies

A

economies that embody elements of both planned and market-based economic systems.

53
Q

Gross domestic product (GDP)

A

Gross domestic product (GDP): The total value of all final goods and services produced within a nation’s physical boundaries over a given period of time.

54
Q

Unemployment rate

A

The percentage of workers of employment age who don’t have jobs and who are actively seeking employment.

ADMIN-1001 Intro to Canadian Business (7 decks)

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