Lecture 9 / Chapter 2

Question 1

Organization fortunes

Answer 1

Interconnected w/ decisions that stakeholders, competitors, gov’t, other orgs are making

Question 2

environmental scanning

Answer 2

monitoring environment in which orgs/clients operate in for influential trends, issues, factors

Question 3

Strategic comms

Answer 3

need to be an asset by incorporating economy knowledge and monitoring economic indicators into comms activities/advice

Question 4

economy

Answer 4

aggregate sum of all goods/services produced among market participants

Question 5

economics

Answer 5

study of cause-and-effect relationships - the consequences of decisions that people make about use of land/labor/capital/resources that go into producing products/services that are bought/sold

Question 6

macroeconomics

Answer 6

concerned with economy as a whole - actions gov’t and countries take to influence the broader economy

Question 7

microeconomics

Answer 7

focused on individual firms/households, concerned w their actions

Question 8

supply and demand

Answer 8

in a free market they interact/influence pricing of products/services - when supply more than demand prices go down, in v.v. prices go up

Question 9

supply

Answer 9

production costs, technology, competition in market, future pricing expectations

Question 10

demand

Answer 10

income levels, consumer preferences, prices of related goods and products, future pricing expectations

Question 11

GDP

Answer 11

gross domestic product - measure of country’s standard of living/general economic health - represents market value of all goods/services produced w/I a country over a set time

Question 12

economic cycles

Answer 12

economies go through, when industry/country is either growing/expanding or declining/contracting

Question 13

US GDP

Answer 13

measured/reported quarterly

Question 14

Recession

Answer 14

when GDP is negative for two quarters in a row - severe one is known as a depression, most infamous is decade following stock market crash of 1929

Question 15

BRIC Countries

Answer 15

emerging economies of Brazil, Russia, India, China - growing at faster pace economically than US (mature market)

Question 16

Employment Report

Answer 16

aka jobs report/jobs number - data on state of employment/unemployment rates - US bureau of labor stats release number of jobs added/lost in US workforce in prior month - sectors. Wall Street estimates - if better than anticipated = good, worse than = bad

Question 17

Jobs Report

Answer 17

released jointly by payroll processing company ADP and ratings agency service Moody - based on private sector hiring by ADP customers

Question 18

US Department of Labor:

Answer 18

every week release report on jobless claims - how many people have filed for unemployment benefits in the prior week - generally less volatile and receive less attention than monthly employment reports

Question 19

Inflation:

Answer 19

rate at which prices rise for products and services, watched by business managers. Means a dollar buys less than it used to. Decreases the value money and reduced purchasing power

Question 20

CPI:

Answer 20

consumer price index - calculated by US Bureau of Labor Statistics, most widely followed measure of inflation, measure of average prices paid by urban consumers for a basket of goods and services

Question 21

US inflation:

Answer 21

less than 2% annually is viewed as acceptable - most countries have own version of CPI and targets

Question 22

Deflation:

Answer 22

falling prices - even worse than inflation, leads consumers to delay purchases, consumers feel poorer, value of assets fall. Steady prices are best

Question 23

Interest rates:

Answer 23

the rate at which interest is paid by people to borrow money from lenders or banks. Affect price and availability of credit for purchasing cars, homes, businesses. Impact price of stocks, bonds, other financial instruments

Question 24

Low interest rates:

Answer 24

“cheap money” - promote economic growth

Question 25

High interest rates:

Answer 25

result in less lending demand and reduced consumer purchases which lower economic growth

Question 26

Federal reserve:

Answer 26

sets federal funds rate - the rate at which other banks lend to each other.

Question 27

Interest Rates and Inflation:

Answer 27

inversely related - interest declines & inflation rises, higher interest rates reduce inflation but slow economic growth, lower interest rates encourage inflation but also economic growth

Question 28

Employment and Economic growth:

Answer 28

economy grows = more jobs, economy declines, jobs reduced/eliminated

Question 29

Consumer confidence:

Answer 29

popular measure of public opinion towards economy. Consumers act how they feel. In US, gauged by consumer confidence index (the Conference board) and Thomson Reuters/University of Michigan consumer sentiment index - both based on surveys that measure how confident/optimistic consumers feel about state of economy

Question 30

Currency exchange rates:

Answer 30

relevant to international currency traders, business managers, and comms professionals.

Question 31

Exchange rate:

Answer 31

the rate at which one currency is exchanged for another. Weaker dollar promotes exports from currency’s home country, but makes imports more expensive.

Question 32

Federal Reserve:

Answer 32

est. in 1913 by US congress. Central bank of US, responsible for setting country’s monetary policy. Dual mandate of promoting maximum employment and stable prices.

Question 33

Federal Open Market Committee (FOMC):

Answer 33

headed by fed chair, meets 8 times a year to set policy such as adjusting rates

Question 34

Fed Chair:

Answer 34

the most powerful appointed official in country/world

Question 35

The role of the Bank of Canada:

Answer 35

exists to “regulate credit and currency in the best interests of the economic life of the nation” - monetary policy, financial system, currency, funds management, retail payments supervision.

Question 36

Behavioural Economics:

Answer 36

the study of the effect of emotional and seemingly “irrational” economic decisions made by individuals and organizations

Question 37

Bounded rationality:

Answer 37

making decisions based on what we know. Issues: lack of expertise or available information.

Question 38

Cognitive bias & discrimination:

Answer 38

personal filters that bias our decision making, which can lead to discrimination against others.

Question 39

Herd mentality:

Answer 39

individuals swayed by other peoples’ actions and behaviours

Question 40

Choice architecture:

Answer 40

offers designed to steer someone into making a specific decision.