Canada’s Economy in 1996 To investigate the state of the Canadian economy, it is very useful to track Canada’s six major economic goals: economic growth, economic stability, economic efficiency, economic equity, viable balance of payments, and low unemployment. At a given time, Canada is achieving some of these goals while falling behind on some of the others. When taken all into consideration, these goals give an indication of how well Canada has been doing and the stage of the business cycle the Canadian economy is in. In 1996-1997, Canada is in slight recession and is only meeting the goals of economic stability, and viable balance of payments. Canada can be said to be in a period of slight recession because there isa downswing in economic activity.
To confirm a true recovery, ‘an economy musts how no growth for two consecutive quarters.’ However, Canada is not in a true recession because there was a 3. 0% growth in the third quarter, compared to 2. 2% in the second quarter. Eventhough it is not true recession, the slow growth is a sure sign of a slight one. Low inflation is also is also prevalent and is symptomatic of a weak economy.
A low inflation rate of 1. 4% in November 1996 does not provide much of an indication for economic growth and expansion. A shrinking positive balance of payments indicates these are tough economic times. A fourth indication of a slight recession is the high unemployment rate. An unemployment rate of 10.
The Essay on Fiscal Policy Economic Government Economy
Monetary policy is the manipulation of interest rates to influence economic activity, whilst fiscal policy is the use of the government budget (variations in the level and composition of taxation and spending) to influence the economy. Both these instruments have a role to play in the Federal Government's policy mix to achieve key economic objectives. Historically, these objectives have been ' ...
0% in November 1996 is definitely not a sign of strong economic recovery. Canada is always trying to work towards the goal of economic growth. Economic growth is the percentage change of GDP over a period of time and is also known as the growth rate. In 1996, Canada’s GDP has been increasing slowly since the first quarter. The GDP in the first quarter was 1. 8%, then increased to 2.
2% in the second quarter, and in the third quarter it rose to 3. 0%. Int his way, Canada has been experiencing steady growth. This goal is being met because of the increase in consumer spending in spite of the government cutbacks. Consumer spending levels tell producers what to produce, and how much to produce.
If consumer spending increases, it gives a signal to the producers to produce more which causes the increasing GDP. The government cutbacks contribute does contribute to lower consumer confidence and, thus, slows the economic growth. Slow, growth causes few jobs to be created as it means a slower rate of expansion of industries. When there is slow growth, few jobs are being created, so it does not help the goal of low unemployment. Slow growth also keeps inflation low. For example, in September 1996, the inflation rate changed from 1.
3% to 1. 2%. To stimulate economic growth, interest rates must be kept low. For example, the bank rate decreased to 3. 5% in November 1996. This encourages businesses to borrow money and to expand.
Increased exports also help stimulate economic growth, because increases in foreign demand for Canadian goods and services may stimulate the domestic markets. The goal of economic stability has been achieved. In 1996, the inflation rate has been relatively low. The inflation rate has been kept low as a result of consumer confidence. Consumers were not willing to spend on expensive items with the current job picture.
The Essay on Analyzing Relationship Between Inflation Rate And Per Capita GDP Growth
There have been different theories for explaining crucial relationship between inflation and per capita GDP growth. In this paper we will consider the neoclassical model and wage equation. This approach is very useful in terms of flexibility to understand underlying assumptions behind the theory. Along with this, this model does include the adjustments in real wages, which is very important while ...
This has contributed to the low inflation rate. For 1996, the annual inflation rate has been in the 1. 2% to 1. 7% range.
The CPI in November 1996 was 136. 8, but in November 1995, the CPI was 134. 1. Over the course of the year, the CPI has only changed 2. 0%. The effects of stability is that the purchasing power of Canadian currency remains more of less the same.
With low inflation, the value of the Canadian dollar, decreases very little. Inflation rate can be tolerated if it provides an incentive for businesses to expand. There, low inflation is also an incentive of economic growth. Low inflation prompts the banks to lower interest rates which also encourages economic growth. Since there are trade offs when deciding whether to raise the inflation rate, governments must keep in mind that high inflation is not healthy, but a little inflation is a prerequisite for growth. The goal of economic efficiency has not yet been achieved, but Canada has always been progressing towards this goal.
In Canada, technology has constantly been improving and updating. If new technology is used, the economy can operate more efficiently, for example, the Bank of Montreal has introduced branchless banking and, computers and machines are replacing human labour. This saves the Bank of Montreal money in hiring workers and having branches all over the city. The reason why Canada has still not met this goal is because the yare losing valuable skill in labour which also lends to efficiency. Not only are banks replacing workers with computers, but even the government is trying to cut down on workers; for example, by scraping the school boards. This means that skilled workers will not have jobs and, therefore, workers are not used to their maximum efficiency.
In the approach towards optimum efficiency, Canada is increasing its competitiveness in the global market as well as chances for stronger economic growth. The unemployment problem can be addressed through job creating programs. The goal of equity has not been reached and the Canadian economy has been regressing from it rather than approaching it. Income inequality is one sign of inequity. There is income inequality between The goal of viable balance of payments has only been achieved for some parts; Canada had a trade surplus where the value of exports have exceeded the value of imports, but in late 1996, that difference between exports and imports decreased. In September, the exports amounted to 23.
The Essay on Inflation Rate In The Philippines 2011
The Bangko Sentral ng Pilipinas (BSP) said that although the scope for keeping policy rates has narrowed due to continued climb of the inflation rate, there is still no need to hike rates. This as the government reported the rise in the inflation rate to 4.3 percent last February from month-ago’s 3.5 percent on account of faster inflation rate in food and oil commodities. BSP Governor Amando ...
5 million and in October 21. 1 million. While the exports decreased by 2. 4 million, imports only decreased 0. 7 million (from 20. 3 million to 19.
6 million).
With only a small trade surplus, Canada is not doing well in this area. It is because of the capital account. Investment abroad was -9420 million in the third quarter while Investments in Canada was only 1824 million, leaving the total capital account to be -7596 million. This negative balance has the undesirable effect of slowing economic growth. As foreigners invest in our country, they bring invaluable resources such as labour and capital.
To encourage a more viable balance of payments, the Canadian government can discourage imports by placing tariffs which cause the price of imports to rise. Canadian industries can also improve exports by increasing production. The government will have also have to increase their sales pitch when trying to get foreigners to invest. The goal of low unemployment has not been reached even though Canada has persistently made attempts to reach it. In October 1996, the unemployment rate rose from 9. 9% to 10.
0%. This rate is quite high compared to the inflation rate which is currently less than 2%! Unemployment has many negative effects. It causes income inequality which is in direct contradiction to the goal of equity. Because of unemployment, consumer confidence has dipped. The lack of jobs has caused consumers to hold back on many of their purchases.
This reduces retail sales and the production of consumer goods which stifles economic growth. The unemployment rate and current economic conditions have caused the unemployed to become frustrated at the job markets as it becomes increasingly difficult to land a secure job. The banks are major players in the battle against unemployment. Instead of sacrificing employment for lower inflation rates, the banks can lower interest rates and stimulate economic and job growth. A second major player is the government. Through retraining and job creation programs, the government can help the unemployed increase the likelihood of obtaining a job.
The Essay on Conflicting Goals In Economic Growth
Conflicting Goals in Economic Growth Goals of monetary policy are to 'promote maximum employment, inflation (stabilizing prices), and economic growth.' If economists believe it's possible to achieve all the goals at once, the goals are inconsistent. There are limitations to monetary policy. The term 'maximum employment' means that we should try to hold the unemployment rate as low as possible ...
In 1996-1997, Canada has been through a period of tough economic times. On the average, Canada has been trying to meet its six economic goals. However, some economic goals are contradictory, so to reach one goal, Canada cannot reach another. Therefore, trade offs are made depending on the relative importance of particular goal in comparison with the other goals at a given time.
Although the overall impression of Canada’s current economy made by these six goals is not a particularly encouraging one, it does provide hope for a better, stronger future economy.
