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Lecture 9

MGTA01 Lecture 9- Nov 11.docx

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Management (MGT)
Course Code
Chris Bovaird

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Monday Nov 11, 2013- Lecture 9 On Exam: A LOT on Balance of Trade Costs & Benefits of Trade On one hand: We want foreign stuff! On other hand: We want Canadian jobs! Balance of = Exports – Imports Trade Balance of Trade Historically: Canada’s Balance of Trade positive i.e.: we exported more than we imported In 2008, that changed… why?-> because of recession, and they are our biggest buyers  Canada was kicked in the manufacturing setting  Oshawa, Oakville: you’d know that we make a lot of car parts Foreign Exchange Affects Trade Strong CDN$: We can buy more from US Weak US$ They can buy less from Canada As the Loonie goes up, Trade balance goes down Too much of our exports just go to one customer. The US represents virtually 3 quarters of all of our exports. We are very heavily dependent upon just one customer. US economy has been weak for the last 5 years, so that’s not good for the Canadian economy. The reason we are an open economy, is because we think it’s the best to get the best stuff from people all over the world. We like the idea of getting German sportscars, Italian suits, Japanese electronics. The problem is, they get all our money and they get the jobs. From a business (employer) point of view, it’s far better that we EXPORT. If we can sell Canadian oil, we get the money, profits, and jobs. Value of US $ to Cdn $ When Jean Chretian was the Premier, the Canadian dollar was very weak. It was worth about 65c US. Our Federal deficit was spiraling out of control. Our government was living hugely beyond its means. Governments were asking all over the world ‘what’s wrong with the Canadian government?’ We had a huge national accumulated debt. Jean Chrétien and Mr. Martin were the guys who took on Canada’s annual deficit problem. They slashed government spending and lots of jobs in Ottawa, cut programs, cut spendings. Over 4-5 years, the wrestled the Canadian deficit problem to the ground. Meanwhile, South of the Border, the politicians have no gotten around containing their debt and deficit problem. Spend less or tax more, or combination of the two. The U.S democrats are not willing to spend less, not wiling to compromise. Over the first 10 years of the millennium, the
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