Chapter 4 Flashcards
what is the role of government in business?
to implement rules, regulations and policies that businesses operate within and safeguard the interests of the customers
why does the government have an invested interest in encouraging business?
so they can tax the businesses and keep the economy competitive in the global market
name the seven government involvements in business?
crown corporations
laws and regulations
the bank of Canada
taxation and financial policies
government expenditures
purchasing policies
services
what are crown corporations?
companies that are owned by the federal or provincial government
why were crown corporations created?
provide services that were not being provided by businesses at the time
to bail out a major industry in trouble
provide services that would not be provided by private businesses
name 5 of 9 crown corporations?
Canadian deposit insurance
Canada pension plan investment board
air canada
Canadian national railway
bank of canada
canadian human rights museum
canadian royal bank
CBC
what is privatization?
the process of selling publicly owned corporations to a private business
who creates laws and regulations for businesses?
politicians and government officials who have been elected by canadians
how does the political party in power affect the business environment?
they affect the business environment by the decisions and policies they make
laws are derived from 4 what sources?
the constitution
precedents established by judges
provincial and federal statutes (laws)
federal and provincial agencies
what kind of government system does canada have?
federalist
who has the final decision on constitutional questions and important civil and criminal cases?
the Supreme Court
name 10 of 11 responsibilities that the federal government may have that could impact business?
trade regulations
incorporations of federal companies
taxation (direct and indirect)
the banking and monetary system
hospital insurance and medicare
public debt and property
national defence
unemployment
immigration
criminal law
fisheries
the federal government can make unlimited ____ and _____?
unlimited laws and taxes
what level of government oversees
aeronautics
shipping
railways
telecommunications
atomic energy?
federal government
what is the role of marketing boards?
to control the supply or pricing of certain products
name five agricultural marketing boards in Canada?
canadian dairy commission
canadian egg marketing agency
chicken farmers of canada
canadian turkey marketing agency
canadian broiler hatching egg marketing agency
name 10 of 11 roles of provincial government in business?
regulation of provincial trade and commerce
natural resources within their boundaries
direct taxation for provincial purposes
incorporation of provincial companies
licensing for revenue purposes
the administration of justice
health and social services
municipal affairs
property law
labour law
education
name 10 of 11 services the municipal government provide?
water supply
sewage and garbage disposal
roads
sidewalks
street lights
building codes
parks
playgrounds
libaries
food service regulations
zoning requirements
is the bank of canada a crown corporation?
yes
who does the bank of canada provide its services on behalf of?
the bank of canada provides services on behalf of the federal government
what are the 3 goals of the monetary policy?
minimize inflation and preserve the purchasing power of the Canadian dollar
maintain real out put to its real potential (try to keep 1 dollar worth 1 dollar)
regulate the external value of the canadian dollar in foreign exchanges
the government wants to _________ the economy and growth ?
stimulate
what is the monetary policy?
the monetary policy is a set of decisions that the government makes through its central bank (bank of canada) regarding the amount of currency available in the economy
if the bank of canada interest rates goes up how will this affect commercial banks interest rate?
it will raise the commercial rates
If commercial bank interest rates raise how will that affect asset prices?
it will lower asset prices because people will less likely to take a loan out to purchase an asset there for lowering the price so assets will go down so that they sell
what is the overnight rate?
the rate that commercial banks set for customers or other commercial banks when they borrow money from them
how often does the overnight rate change?
daily
what is the policy rate/ bank rate?
the rate that the Bank Of Canada (BoC) sets for borrowing money from them
who would deal with the bank of canada?
commercial banks and canadian government
if the economy is struggling what will the BoC do to help it?
lower policy rate so the commercial banks will drop the overnight rate to increase borrowing and spending and they can increase the money supply
when the overnight rate drops will the demand for credit go up or down?
firms and households will increase their demand for credit
when the overnight rate drops will the credit supply go up or down?
commercial banks will increase their credit supply
what will the BoC do when inflation rates are rising?
they will raise the policy rate so the overnight rate will go up so spending will slow down and slowing inflation
how does the policy rate affect the overnight rate?
the overnight rate will normally rise and fall with the policy rate
when the policy rate rises how will that effect the demand for credit?
it will lower the demand for credit by households and firms
when the policy rate rises how will that effect the commercial bank credit supply?
the commercial bank credit supply will decrease
when inflation is high how will that effect borrowing?
there will be a decrease in borrowing do the to raising policy rate and overnight rate
what does the federal government rely on for revenue?
income tax and other tax revenue
what does the provincial government rely on for revenue?
income tax and sales tax
what does the municipal government rely on for revenue?
property tax
what is the fiscal policy?
how the government collects and spend tax dollars
what is the first half of the fiscal policy?
involves taxation. high tax rates tend to slow the economy, drawing money away from the private sector and remitting it to the government
what is the second half of the fiscal policy?
government spending
is the fiscal policy a government stabilization policy?
yes using taxes government purchases as its tool
why are stabilization policies implemented?
to reduce ups and downs in the business cycle
how does an expansionary fiscal policy effect taxes and government spending?
government spending increases and tax rates decreases to stimulate spending
how does a contractionary fiscal policy effect government spending and tax rates?
government spending decreases and increase tax rates to restrain spending
what will cause a reduction in national debt?
a surplus of revenues
what is monetary policy?
the management of the money supply and interest rates
who controls the monetary policy?
the bank of canada
when the money supply grows how will that effect the economy?
more money is available to businesses and others so the economy grows faster
what happens to the economy when the bank of canada lowers the money supply?
the economy slows
what are some of the services that governments spend huge sums of money on?
education
health
roads
ports
waterways
airports
who is the largest purchaser of goods and services in canada?
the government
who will the Canadian government most often award contracts to?
canadian businesses even if they are more expensive than non canadian bids
what does industry canada regulate?
food ingredients
clothing labels
measurement accuracy of scales
fuel pumps
what does the national research council (NRC) do?
responsible for research and development regarding science and technology to innovate and keep canada competitive in the global market
what does global affairs canada do?
maintain embassies and consulates overseas
conduct trade missions
what does development bank of canada (BDC) do?
provide small and medium sized businesses with flexible financing, affordable consulting services and venture capital
what does export development canada (EDC) do?
provides canadian exporters with financing, insurance and bonding services as well as foreign market expertise
what does the CIDC do?
insures all deposits in financial institutions up to 100,00 dollars
how do provincial governments protect consumers?
regulate the stock exchanges in canada and setting the rules for all public companies
name 6 ways that municipal governments protect consumers?
inspect buildings
set zoning regulation
license businesses
tax water
charge fees
regulate parking
what Is the role of the provincial government in business?
workers comp
labour regulations
liquor sales
