Canada is one of the wealthiest nation in the world, it has a Gross Domestic Product (GDP) that was worth 1786.66 billion US dollars in 2014, which ranks 14th worldwide. The GDP value of Canada represents 2.88 percent of the world economy. GDP in Canada has continually increased year to year, with the exception of 2008 to about 2010. Canadas average GDP is 581.41 USD Billion from 1960 until 2014, reaching an all-time high of 1838.96 USD Billion in 2013 and a record low of 40.77 USD Billion in 1961. GDP per capita percent growth has been positive except for 1975, 1982, 1991, and 2009 were negative 0.09, 4.18, 3.44, 3.82 percent respectively. Canada had maintained a positive trade deficit until 2008 were it began to see a negative trade deficit, since 2008 it has fluctuated between positive and negative trade deficit. See figure 1
Canada is considered a social market economy, which is a combination of free market and state funded provisions for those unable to participate in the labor. In the “Index of Economic Freedom” of the Heritage Foundation, Canada is rated higher than most western European countries and slightly lower than the USA. Similar to other developed countries, the Canadian economy is dominated by the services sector.
Canada is the leader in mining for natural resources of potassium, nickel, zinc, cadmium, sulfur and uranium. In agriculture, Canada is one of the world’s largest exporters of agricultural products, even though only about 8% of Canada is used for agriculture. Canada has an Industrial Price Index indicates that the real production output of manufacturing, mining, and utilities has been continuously increasing since 1991 (with the exception of 2008). Unemployment in Canada has historically been higher that the United States, this changed in 2008. Unemployment and inflation, like the United States, Canada does not produce a Phillips Curve at any time during the 1970’s to 2013. The most interesting part of the Philips curve in this period is during 1982, were Canada experienced high inflation and high unemployment at the same time, were inflation was at 9.27 percent and unemployment rate was at 11 percent. This is the only time that the Philips curve theory might be applicable. (see figure 2) Economic Situation Canada like many countries around the world, it is recovering from the financial crisis although unlike the United States it was not as severe, GDP per capita is recent years has surpassed the US GDP by a small margin. Labor force participation rate has been consistent been between 44.08 percent and 47.21 percent, from 1990 to 2013. Canada historically Canada has had a higher unemployment rate than United States but this changed in 2008 were United States surpassed Canada in unemployment (see figure 3 and 3.1). Canada also has a lower long-term unemployment rate than the United States since 2001, which coincides with the dot.com bubble burst in the US. Canada’s providences have not recovered from the financial crisis equally, New Brunswick and Prince Edward Island faring better than the other providence. (Full-time employment rate is defined as the share of the total population aged 17 to 64 employed at least 30 hours per week in their main job). Food banks have seen an increase in recent years, it has increased 26 percent since the financial crisis of 2008. The international Monetary Fund has cut the growth outlook for the Canadian economy to just 1.0 percent, due to the drop in reduced investment in the energy sector. “In commodity exporters, lower commodity prices weigh on the outlook through reduced disposable income and a decline in resource-related investment. The latter mechanism has been particularly sharply felt in Canada,” the IMF wrote in its report. …show more content…
The object of this expansionary fiscal policy by the Canadian government, is to shift the demand curve to intersect with the short run aggregate supply curve and with the long run aggregate demand curve. In this case, since Canada is in the midst of a recession the aggregate demand curve is to the left of the intercept of the long run aggregate demand curve. At present the equilibrium of output (y1) is lower than the full employment of output (yfe) the difference of yfe and y1 is the recessionary gap. This recessionary gap is what the Canadian government is attempting to
Canada is considered a social market economy, which is a combination of free market and state funded provisions for those unable to participate in the labor. In the “Index of Economic Freedom” of the Heritage Foundation, Canada is rated higher than most western European countries and slightly lower than the USA. Similar to other developed countries, the Canadian economy is dominated by the services sector.
Canada is the leader in mining for natural resources of potassium, nickel, zinc, cadmium, sulfur and uranium. In agriculture, Canada is one of the world’s largest exporters of agricultural products, even though only about 8% of Canada is used for agriculture. Canada has an Industrial Price Index indicates that the real production output of manufacturing, mining, and utilities has been continuously increasing since 1991 (with the exception of 2008). Unemployment in Canada has historically been higher that the United States, this changed in 2008. Unemployment and inflation, like the United States, Canada does not produce a Phillips Curve at any time during the 1970’s to 2013. The most interesting part of the Philips curve in this period is during 1982, were Canada experienced high inflation and high unemployment at the same time, were inflation was at 9.27 percent and unemployment rate was at 11 percent. This is the only time that the Philips curve theory might be applicable. (see figure 2) Economic Situation Canada like many countries around the world, it is recovering from the financial crisis although unlike the United States it was not as severe, GDP per capita is recent years has surpassed the US GDP by a small margin. Labor force participation rate has been consistent been between 44.08 percent and 47.21 percent, from 1990 to 2013. Canada historically Canada has had a higher unemployment rate than United States but this changed in 2008 were United States surpassed Canada in unemployment (see figure 3 and 3.1). Canada also has a lower long-term unemployment rate than the United States since 2001, which coincides with the dot.com bubble burst in the US. Canada’s providences have not recovered from the financial crisis equally, New Brunswick and Prince Edward Island faring better than the other providence. (Full-time employment rate is defined as the share of the total population aged 17 to 64 employed at least 30 hours per week in their main job). Food banks have seen an increase in recent years, it has increased 26 percent since the financial crisis of 2008. The international Monetary Fund has cut the growth outlook for the Canadian economy to just 1.0 percent, due to the drop in reduced investment in the energy sector. “In commodity exporters, lower commodity prices weigh on the outlook through reduced disposable income and a decline in resource-related investment. The latter mechanism has been particularly sharply felt in Canada,” the IMF wrote in its report. …show more content…
The object of this expansionary fiscal policy by the Canadian government, is to shift the demand curve to intersect with the short run aggregate supply curve and with the long run aggregate demand curve. In this case, since Canada is in the midst of a recession the aggregate demand curve is to the left of the intercept of the long run aggregate demand curve. At present the equilibrium of output (y1) is lower than the full employment of output (yfe) the difference of yfe and y1 is the recessionary gap. This recessionary gap is what the Canadian government is attempting to