Don’t throw money down the grave

Chapter seven - Money and the Canadian Banking System

Link: http://www.financialpost.com/personal-finance/family-finance/story.html?id=1006638

Summary
This article is about how Canadians, after buying a house and sending their children to college, dying might be the most costly thing they will ever do. Nicole Renwick, execute director of the Memorial Society of British Columbia estimated that the average funeral cost was $10,000.

"The average cost of a funeral service in eastern Canada is $3,075. In central Canada, professional services can exceed $4,000. In the West, the average cost is $2,875."

Arranging a funeral for loved ones could be highly stressful. However, most people want to provide loved ones with the best funeral possible and also not wanting to be cheap. Funeral experts recommend that preplanning your funeral would get rid of their families having to worry and deal with it later on.

Connection
The connection between this article and chapter seven is the demand for money. It is essential to have money so that people can carry on daily business. This require for money is referred to as the transaction demand. People who worry about preparation of their funeral would have a higher demand for money because they have to also support their families such as education for their children. The category precaution, under the list of demand for money, is also a factor that is covered in this article. The precautionary demand for money may happen if a loved one dies and they did not pre-arranged their own funeral. Their family members would have to pull out the money they kept ready for unexpected circumstances and emergencies to cover up the expenses for the funeral.

Reflection
Although I have never experienced planning a funeral before, but I believe that it is very stressing. I see my aunts and uncle who are already pre-arranging their own funerals and also helping my 90 year old grandma pre-arranging hers. I am still in a young age so my income is low. The amount of money that i hold for precautionary purposes is not as much as what my parents have. I do not have as much responsibility as what most adults have and so i would use most of my income for transactions and the rest for precautionary purposes.

'Significant sacrifices' in tentative deal with GM: union

Economics Chapter 6

http://www.cbc.ca/canada/story/2009/03/08/caw-gm.html

Summary
This article is about General Motors seeking financial assistance from the federal and Ontario government by discussing a tentative contract agreement with them. The tentative contract agreement includes "significant sacrifices" that the union must agree to, to ensure that the federal government would grant financial assistance. Canadian Auto Worker president, Ken Lewenza, said that the company would surely fail if the government doesn't provide emergency assistance. Some of the conditions were the federal government's demand of contract cuts, freeze both wages and pensions, cut paid vacation time, and make current workers and pensioners pay more for health and insurance benefits. In the previous month, GM planned a restructuring plan that would drop its Canadian workers to 7,000 and request as much as $7 billion from the federal and Ontario governments.

Connection
The connection between this article and chapter six is the circular flow of money. Since the economy is really poor right now and General Motors is having a hard time trying to stay away from bankruptcy, GM is seeking for help from the government. If the federal government agrees to spend money to help GM, then the automaker would rise again. This could possibly make GM have more workers again, but wages may not increase because of the condition of freezing wages. GM's source of investment fund in this case is borrowing money from the government. GM can pay payments to other businesses which would, in turn, pay their payments to households. This is the injection to the circular flow of money.

Although General Motors may rise again, income of the workers would not increase because of the contract. Even if the wages go up, households would less likely increase their spending because of how the economy is today. Saving money by the households would reduce the money in the circular flow. GDP would decrease because savings would be high.

Reflection
GM is in a very serious situation right now because they're at the point of asking for financial assistance from the government. Employees have very less benefits because the condtitions affect them heavily. They're working so hard to maintain the business from collapsing and yet their wages and pension must freeze. I think if GM falls, everyone would partially fall as well because us, as consumers, would lose a company that can produce fuel-saving automobiles.