Chapter 4 Business Management review.docx

Chapter 4 Business Management review.docx

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Chapter 4 Business Management  Economics: The Framework for Business Economics: Navigating a Crisis Economies have been in a crisis since 2008  Canadians weathered the worst of the two turmoil   When US economy is in recession. Ex; US unemployment increases and both American  consumers and American businesses reduce their spending, Canadian exports are then  reduced and this happens at the same time when the US tourists to Canada decreases.  The  Economy  is essentially a financial and social system of how resources flow through  society.  Economics  is the study of the choices that people, companies, and governments make in  allocating those resources.  Macroeconomics  is the study of the country’s overall economic issues, such as  employment rate. Microeconomics  focuses on smaller economic units such as individual families, and  businesses.  Fiscal Policy:  Fiscal policy refers to government efforts to influence the economy through  taxation and spending to encourage growth, boost employment, and curb inflation. Budget Surplus:   A budget is incurred by the government if revenue is greater than spending.  Budget Deficit:  Budget deficit is incurred by the government if spending is greater than revenue  and money must be borrowed. Federal Debt:  Federal debt is the sum of all money borrowed that has been accumulated and not yet paid.  Monetary Policy:  This refers to actions that shape the economy by influencing interest rates,  and supply money. The federal government manages Canadian monetary policy through the  Bank of Canada.  Money Supply:  The total amount of money within the overall economy. M1- All currency- paper bills and coins- plus chequing accounts and traveler’s cheques.  M2- All M1 money supply plus most savings accounts, money market accounts, and certificates  of deposit. 
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