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ADMS 1000 (315)
Chapter 2

ADMS 1000-Chapter 2 Reading Notes

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Administrative Studies
ADMS 1000
Anton Petrenko

Oligopoly: Occurs when few industry dominates and industry  Has high barriers  Automotive, oil, gas are examples of oligopoly Monopolistic Completion: Most other products in the free market fall under this completion  Large number of companies compete with one another and offer minor different product or different style, design, or advertising Goals of Canada’s economic system 1. Business cycle:  Refers to the rise and fall of economic activity over time.  Even though economy will grow over a long term, growth is usually unstable  Some period of fluctuation are difficult and long and some are short and mild  The 5 stages of the business cycle are expansionary, peak, contraction, trough, and recovery  Expansionary phase: a period when economic activity is rising, goods are being produced, demands for goods are increasing, profits are rising. Once economy has reached the high point, we call it the peak.  Contraction phase: phase is when economic activity is declining, profits falling, during this phase workers get laid off etc.  Recession: Realized when 2 or more consecutive quarter periods of negative or falling activity  Depression: an extreme recession, characterized by longer economic periods of declining economic activity, high unemployment  Trough: opposite of peak the very low level of economic activity Measuring Economic growth  Gross domestic product (GDP) - Value of all final goods/service produced within a country’s border  Gross national product (GNP) - is the value of all final goods and services produced by a national economy inside and outside of the country’s border  GDP can be calculated in different ways, real GDP, nominal GDP, and GDP per capita  Real GDP: is adjusted to reflect the effects of inflation (takes out the effect of rising prices)  Nominal GDP: Not adjusted for inflation, and is measured in current dollars  GDP per capita: means GDP per person in a country, calculated by dividing the total GDP by the total population of a country. 2. Productivity  Measure of the level of output versus the level of input in an organisation  Input: Can include materials, labour, or overhead  Output: Is often a unit of production ready to be sold  Productivity is said to be increasing if output is the same number as input, or same output and less input  Who benefits? The business benefits by reducing its costs and increasing its net profits, the consumer may also benefit because the prices are lower 3. The balance of trade  Is the value of all goods and service a country exports minus the value of imports  Trade surplus: Occurs when a country exports more goods/services then is imports o This indicated positive balance of trade and encourages economic growth  Trade deficit: When a country imports more goods/services then it exports o This indicates negative balance of trade and means more money is being spent of foreign products 4. Exchange Rate  More firms are doing business outside of their countries, when they are doing that they have to worry about currency and exchange rates  Exchange rate: The amount of domestic currency that must be given up to get a froing currency  Three ways a business will have to exchange 1. When you purchase goods from other countries 2. Investing in stocks/b
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