Chapter 4 The Role of Government in Business .doc

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Accounting & Financial Management
AFM 131
Robert Sproule

Brandon Cho AFM 131 Chapter 4 Notes September 22, 2011 Chapter 4 “The Role of Government in Business” Notes - There are 6 different activities that governments use to affect businesses that can be condensed into categories. a) crown corporations b) laws and regulations c) taxation and financial policies d) government expenditures e) purchasing policies f) services Crown Corporations - These corporations are companies that are owned by the government. (Ex: Canada National Railway) - The purpose of their creation was to bail out a major industry in trouble. - Each province in Canada has some sort of Crown Corporation that they own. (Ex: Ontario owns Hydro One, an electricity and heat supplier company) - Governments can decide to sell its crown corporations. This process is called privatization. (ex: Air Canada went private, formerly a crown corporation) - Crown corporations create inefficiencies in production. Laws and Regulations - Federal government oversees many different industries. - One of the laws and regulations passed by the government was the Competition Act which restricts any mergers of large corporations if they reduce competition. - Marketing Boards: a creation of a special system that allows for the controlling of the supply or pricing of certain agricultural goods. (Ex: Canadian wheat board, Canadian diary commission, etc) - Quotas do not permit normal competition since importers will not be able to compete. It helps farmers to make money. In addition, importers of canada’s agricultural goods may receive loans with favourable conditions to enable countries to buy them, increasing our net trade. - Trade Barriers: some exists in a country, also known as interprovincial trade. Taxation and Financial Policies - The government may decide to increase ta
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