Government Finance and Economic Policies Quiz
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Questions and Answers

What is the term used when government spending exceeds the amount of taxes gathered during a fiscal year?

  • Transfer payment
  • Deficit (correct)
  • National debt
  • Surplus

Which of the following statements correctly describes the impact of high tax rates on the economy?

  • High tax rates slow down the economy and discourage small businesses. (correct)
  • High tax rates lead to increased consumer spending.
  • High tax rates encourage individuals to invest in the economy more.
  • High tax rates typically boost small business growth.

What does a surplus in the budget indicate regarding national debt?

  • No impact on national debt levels.
  • A reduction in national debt due to excess revenues. (correct)
  • A doubling of national debt over fiscal periods.
  • An increase in national debt due to over-expenditures.

What is the purpose of transfer payments issued by the federal government?

<p>To provide direct payments to governments or individuals. (C)</p> Signup and view all the answers

Which of the following best describes the federal government’s procurement policies?

<p>They aim to support Canadian businesses using government purchasing power. (B)</p> Signup and view all the answers

How does increased borrowing and spending affect the economy?

<p>It can stimulate the economy. (C)</p> Signup and view all the answers

What role do subsidies play in government financial aid?

<p>They are designed to achieve specific government purposes. (B)</p> Signup and view all the answers

What is equalization in the context of federal programs?

<p>A program aimed at reducing fiscal disparities among provinces. (B)</p> Signup and view all the answers

What is the primary purpose of an operating or master budget?

<p>To summarize the business’s proposed financial activities (B)</p> Signup and view all the answers

How does financial control benefit a firm?

<p>It allows comparison of actual results with the budget (B)</p> Signup and view all the answers

Why might a firm need to adjust its financial plan?

<p>Due to legitimate economic or natural shifts (C)</p> Signup and view all the answers

What is a common practice among companies to maintain financial control?

<p>Monthly financial reviews (C)</p> Signup and view all the answers

What does the need for operating funds in a business primarily relate to?

<p>The firm's operational needs (A)</p> Signup and view all the answers

What is one major outcome of mutual respect between employees and the company?

<p>Improved bottom line performance (C)</p> Signup and view all the answers

Which of the following reflects the responsibility of companies towards society?

<p>Building new wealth for all stakeholders (C)</p> Signup and view all the answers

What is the implication of engaging in a social audit for a company?

<p>Evaluating environmental and social impact (B)</p> Signup and view all the answers

What are the components of the triple bottom line (TBL)?

<p>People, Planet, Profit (B)</p> Signup and view all the answers

Which group does not serve as a watchdog in social responsibility efforts?

<p>Market analysts (D)</p> Signup and view all the answers

What effect can environmental efforts have on companies?

<p>Might increase costs but can enhance market share (A)</p> Signup and view all the answers

What is sustainable development primarily concerned with?

<p>Integrating environmental, economic, and social considerations (C)</p> Signup and view all the answers

Which of these is a criticism faced by companies regarding their environmental impact?

<p>Neglect of environmental concerns (C)</p> Signup and view all the answers

What is one of the primary roles of managers in modern organizations?

<p>To guide, train, support, motivate, and coach employees (A)</p> Signup and view all the answers

Which of the following is NOT one of the four main functions of management?

<p>Marketing (C)</p> Signup and view all the answers

What does the controlling function of management primarily involve?

<p>Monitoring performance and taking corrective actions (B)</p> Signup and view all the answers

How are scarce resources managed within an organization?

<p>By carefully planning how best to utilize each type of resource available (A)</p> Signup and view all the answers

Why is transparency in management becoming increasingly important?

<p>It aids in building trust and addressing social responsibility. (D)</p> Signup and view all the answers

What is an essential skill for future managers in a global context?

<p>Strong communication and team collaboration skills (B)</p> Signup and view all the answers

During the leading function of management, what is a manager responsible for?

<p>Providing feedback on performance to encourage effective work (C)</p> Signup and view all the answers

What does effective planning in management involve?

<p>Setting a vision, values, goals, and objectives (D)</p> Signup and view all the answers

What is the primary function of finance within a business?

<p>To acquire and manage funds for the firm (B)</p> Signup and view all the answers

How do financial managers differ from accountants?

<p>Financial managers interpret financial data, while accountants generate it (A)</p> Signup and view all the answers

Which of the following is NOT a common reason for a firm's financial failure?

<p>Strong investment in long-term assets (A)</p> Signup and view all the answers

What is one of the key responsibilities of financial managers?

<p>Collecting overdue payments to minimize bad debts (D)</p> Signup and view all the answers

In larger companies, who typically oversees both accounting and finance functions?

<p>Chief Financial Officer (C)</p> Signup and view all the answers

Which function is NOT considered a part of financial management?

<p>Maintaining employee records (D)</p> Signup and view all the answers

What aspect of finance must financial managers keep an eye on?

<p>Changes in tax laws (C)</p> Signup and view all the answers

Which title is typically held by someone overseeing finance in an organization?

<p>Chief Financial Officer (D)</p> Signup and view all the answers

What is a critical reason financial managers minimize cash expenditures?

<p>To maximize investment potential of funds (C)</p> Signup and view all the answers

What is the potential drawback of offering credit to customers?

<p>Up to 25% of business assets tied in accounts receivable (A)</p> Signup and view all the answers

Why is efficient cash management particularly important for small firms?

<p>Their access to capital is generally more limited. (D)</p> Signup and view all the answers

How do financial managers recommend handling accounts payable?

<p>Pay bills as late as possible to maximize cash availability (A)</p> Signup and view all the answers

What is a key component of effective inventory management?

<p>Implementing just-in-time inventory control (D)</p> Signup and view all the answers

What are capital expenditures primarily related to?

<p>Investments in long-term tangible and intangible assets (B)</p> Signup and view all the answers

What financial strategy can help in collecting accounts receivable efficiently?

<p>Offering cash discounts for early payments (D)</p> Signup and view all the answers

In what scenarios may making credit available to customers be beneficial?

<p>During financial distress or recession (D)</p> Signup and view all the answers

What is one consequence of poorly managed inventory?

<p>Potential drain on financial resources (C)</p> Signup and view all the answers

What is a significant investment included in capital expenditures?

<p>Purchasing land for future development (D)</p> Signup and view all the answers

Flashcards

Contented Employees

Employees who are satisfied with their work environment, leading to higher productivity and performance.

Social Responsibility of Companies

Companies have a responsibility to contribute positively to society, beyond just making profits.

Triple Bottom Line (TBL)

A framework for measuring a company's performance based on environmental, social, and economic impacts.

Social Auditing

A systematic evaluation of a company's practices in social responsibility.

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Sustainable Development

A process of development that meets present needs without compromising the ability of future generations to meet their own needs.

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Watchdogs of Social Responsibility

Groups that monitor and evaluate companies' social responsibility practices.

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Environmental Responsibility

Minimizing the negative impact of business operations on the environment.

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Interpersonal Ethics and Social Responsibility

Ethical behavior and social responsibility extend beyond business operations and influence relationships within and outside the organization.

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Fair Trade

A movement ensuring fair prices and working conditions for producers in developing countries.

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Factors of Production

Resources used to produce goods and services, including labor, land, capital, and entrepreneurship.

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Scarce Resources

Limited resources that create a need for efficient management.

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Modern Manager Responsibilities

Modern managers guide, train, support, motivate, coach and foster global preparedness.

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Corporate Governance

Transparent practices in how organizations operate and their social responsibility.

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Four Functions of Management

Planning, Organizing, Leading, and Controlling, to achieve company goals.

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Planning

Setting goals, developing strategies, and determining resources needed for success.

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Leading

Guiding and motivating employees to achieve organizational goals.

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Finance

The function within a business responsible for acquiring and managing funds.

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Financial Manager's Role

Managing a company's resources to achieve its financial goals and objectives.

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Accountant vs. Financial Manager

Accountants record financial data, while financial managers interpret it and make strategic recommendations.

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CFO's Responsibility

In larger companies, the CFO oversees both accounting and finance functions.

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Common Reasons for Financial Failure

Undercapitalization, poor cash flow control, and inadequate expense control.

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Financial Manager's Responsibilities

Paying bills on time, collecting overdue payments, and managing credit and customer payments.

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Why Financial Managers Must Stay Updated

They need to be aware of changes in financial laws and opportunities.

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Financial Management's Scope

It covers all aspects of a company's finances, from budgeting and cash flow analysis to strategic investments.

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Operating Budget

A budget that combines all of a company's individual budgets and summarizes its proposed financial activities. It's like a master plan for the company's finances.

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Master Budget

Another name for an operating budget. It encompasses all aspects of a company's financial planning, including sales, production, and expenses.

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Financial Control

The process of regularly comparing a company's actual financial performance to its budget. It helps ensure the company stays on track and achieves its financial goals.

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Why Need Operating Funds?

Businesses always need funds for their operations. They need money to cover expenses such as salaries, rent, and supplies, making it a critical aspect of running a business.

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Financial Reviews

Regular meetings where companies analyze their actual financial performance against their budget. This helps identify variances and take corrective actions.

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Time Value of Money

The idea that money available today is worth more than the same amount of money in the future due to its potential to earn interest.

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Efficient Cash Management

Managing cash flow to optimize the use of funds, minimizing unnecessary expenditures and maximizing investment opportunities.

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Credit Operation

The process of offering credit to customers, balancing the benefits of attracting customers and retaining them with the risk of non-payment.

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Inventory Control

Managing the amount of goods a company keeps in stock to meet customer demand, balancing the need for enough stock with the cost of holding too much.

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Just-in-Time Inventory

A system where goods are ordered and received only when needed, minimizing storage costs and stock waste.

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Capital Expenditure

Major investments in long-term assets like buildings, equipment, and intellectual property, used for expansion, production, or development.

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Cash Discount

A reduction in price offered to customers who pay their bills early.

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Quantity Discount

A reduction in price offered to customers who buy larger quantities of goods.

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Short-Term Financing

Obtaining funds for a short period of time, often used to cover immediate operational expenses or gaps in cash flow.

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Long-Term Financing

Obtaining funds for a longer period, usually to finance major investments or expand a business.

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Sin Tax

A tax levied on goods or services considered harmful or undesirable, like alcohol or tobacco.

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Fiscal Deficit

When a government spends more money than it collects in taxes in a given period.

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National Debt

The total amount of money a government owes to its creditors, accumulated over time.

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Fiscal Surplus

When a government collects more taxes than it spends, reducing the national debt.

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Transfer Payments

Direct payments from the government to individuals or other governments, like social security or equalization.

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Government Procurement

The way governments buy goods and services, prioritizing Canadian businesses.

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Equalization

The federal government's program to reduce financial disparities between provinces and territories.

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Government Expenditures

Spending by the government on various programs and services, like healthcare and education.

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Study Notes

Competing in Global Markets

  • Over 90% of companies today think it's important for employees to have experience from working in other countries.
  • There are over 7 billion potential customers globally.
  • Companies are always looking for ways to grow, including global expansion.
  • The Canadian global auto industry has been impacted by global trends.

Exporting and Importing

  • Exporting: selling products to another country.
  • Importing: buying products from another country.

Trade with Other Nations

  • No country can be fully self-sufficient; they often lack resources in one area or another.
  • Trade is necessary to overcome these deficiencies.
  • Example: Venezuela and the Democratic Republic of Congo are rich in natural resources but lack technology, while Japan and Switzerland have advanced technology but lack resources.

Pros and Cons of Free Trade

  • Pros:
    • Global market with 8 billion potential customers.
    • Increased productivity when countries focus on what they're best at.
    • Keeps prices and inflation lower due to global competition and cheaper imports, leading to economic growth.
    • Encourages innovation and maintains competition.
    • Increased access to foreign investments and lower interest rates.
  • Cons:
    • Domestic workers can lose their jobs due to imports or production relocation.
    • Reduced wages and job security for domestic workers.
    • Domestic companies losing their advantage compared to foreign companies moving overseas.

Comparative and Absolute Advantage

  • Comparative Advantage: A country should sell products they produce more efficiently, and buy products from other countries that they can't produce as efficiently.
  • Absolute Advantage: A country has a monopoly on, or produces a product more efficiently than other countries. This often isn't sustainable.

Importing Goods and Services

  • Canada Border Services ensures imported articles meet certain conditions.
  • Conditions may include import prohibitions, permits, and other regulations (like labeling, emission controls, health, and sanitary checks).

Measuring Global Trade

  • Balance of Trade: The difference between the value of a nation's exports and imports.
  • Trade Surplus: Exports exceed imports.
  • Trade Deficit: Imports exceed exports.
  • Balance of Payments: Flows of money coming into and out of a country.
  • The goal is a favorable balance of payments, meaning more money coming in than going out.

Strategies for Reaching Global Markets

  • Licensing: A company licenses the right to manufacture its product or use its brand to another company internationally, often through royalties. This also typically includes sending representatives from the licensor to help with set up, distribution, etc, to the licensee.
  • Exporting: Unsolicited orders, or purposeful effort through specialist export traders.
  • Franchising: A contractual agreement in which a business sells the rights to use their business name and sell their service in a specific territory.
  • Joint Ventures and Strategic Alliances: Two or more companies combine to undertake a project.

Role of Government in Business

  • Crown Corporations: Corporations owned by federal or provincial governments.
  • Laws and Regulations: The rules that affect businesses.
  • Bank of Canada: The central bank of Canada that manages the country's money supply.
  • Taxation: Taxes collected by governments used for public services and operations.
  • Government Expenditures: The amounts governments spend; affects other business, employment, market viability.
  • Government Purchasing Policies: How the government purchases goods and services; can influence domestic business.
  • Services: Services offered by the governments (healthcare, education, and other public services).

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Description

Test your knowledge on key concepts of government finance and economic impacts. This quiz covers topics such as budget surplus, tax rates, federal procurement, and the effects of government spending. Learn about how these elements interact within the economy.

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