Class Notes (1,100,000)
CA (620,000)
UTSC (30,000)
MGT (300)
MGTA01H3 (400)
Lecture 6

Lecture 6 - International Business


Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird
Lecture
6

Page:
of 6
MGTA03
LECTURE 6 CHAPTER 2
Basic measures of economics performance
GDP, GDP growth, GDP/capita, productivity, unemployment
GDP is the dollar value of all the goods and services produced in the course of one
year in a country
US produces about 11-12 times more products than us
Is the economy growing? Is the Canadian economy growing
Canada usually grows about 2-3%
Canada had huge policy changes + mass globalization + opened to the world (export)
Chinese economy growing by 10%
Divide total GDP with the population to get GDP per capita
Doesnt say if everyone is healthy, but if its relatively healthy or relatively poor
Average Canadian GDP is $40,000
Canada is in the top 20 of the world
Canadas GDP is less than the US, US is a little bit richer on average than Canada
US is 20% more wealthier than us because of productivity, make more
Can make more stuff if you have access to lots of and good quality factors of
production
Good quality raw materials
Reasons: more and better universities, access to better technology, spend more time
working smart, climate (affects time and distances of travel), etc.
Canada has to work harder
US has done a better job at using their people [factor of production]
Canada unemployment rate: 6-8%, US: 4-7%
Economic theory says use the people who are willing to work hard
Recently unemployment rate in Canada shot up to 10%
www.notesolution.com
MGTA03
GDP is growing less quickly
GDP adjusted for unsold products
Inflation
Prices going up (not because of a change or quality)
Purpose of the economy is that people can buy as much as they want
Prices going up for no apparent reason then we can afford to buy less
Inflation affects people who are on a fixed income the most
Retired people, those on pensions
In Canada the inflation rate has been roughly 1-3%
Inflation exists in Canada but not a big problem
Govt. of Canada tries not to print too much money
How did Zimbabwe get such high inflation? Zimbabwe is simply printing lots and lots
of money
This makes the money lose its value and relevance
Printing pieces of paper you hope people will buy
Prices doubling everyday
Money becomes worthless, Zimbabwe stopped printing any currency
To buy people trade or use foreign currency
Deflation prices are falling
Deflation hurts people who own things: houses
Those paying mortgages are worse off in the future (pay more than what their house
was worth)
People also delay purchases they were planning to make
If people delay purchases, no one goes into a store to buy something
www.notesolution.com
MGTA03
Businesses are worse off, no one is buying anything
Sales people lose their jobs, manufacturers lose their jobs
They dont end up contributing to the economy
People lose the ability to invest in the future
Unemployment rate goes up
People dont go out and make those purchases
Deflation not only happening in the US, but also happening in Ireland
Prices falling for the last 4-5 years in Ireland
In Ireland, young graduates are looking for jobs elsewhere because prices and
economic conditions in Ireland are falling
How do we calculate the rate of inflation?
Consumer Price Index (CPI)
Every month Stats Canada sends out researchers who go to malls/stores and make
note of retail prices of various goods
Stats Canada comes up with a shopping basket for typical goods a typical Canadian
family would spend their money on (rent, travel, vacation, clothing, entertainment,
etc)
Come up with a number and then evaluate the change in spending for basket of
goods
Calculate inflation * (on midterm)
CHAPTER 5 INTERNATIONAL BUSINESS
Foreign trade, doing business with others represents a large percent of Canadas
total GDP
We import $440 billion worth of stuff, export $400 billion
www.notesolution.com