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Canada Analysis

1188 words - 5 pages

United States vs. Canada
[Econ 101 – Summer]

United States vs. Canada
Macroeconomics is the field of the economics that deals with how individuals change their economic behavior when there is change in the market-wide policies. One of the two applications that are widely studied in the macroeconomics is the Fiscal Policy, Monetary Policy and aspect of Monopoly. The fiscal policy is implemented by the government of the U.S. The monetary policy is reviewed during the schedule of 8 meetings per year, during which it is analyzed and discussed that how economic and financial developments taking place in the country and determines the appropriate stance of the monetary ...view middle of the document...

Each option provides its positives and negatives, but it is up to each economist to determine which negatives are worth giving up. The Keynesian theorists believe in correcting economic downturns with fiscal policy actions. Actions that would please Keynesian theorists would include changes in government spending, changes in the amount of taxes, and changes made to investments in long term productive growth. During the most recent fiscal crisis, these theorists were happy with the stimulus package that was created by the government. The government in 2009 introduced an economic stimulus package that increased government spending which caused the government deficit to increase and with the multiplier of government spending tried to increase demand. Keynes held the opinion that the state needed to play a larger role in the economy in order to eliminate some of the uncertainty involved in the classical economics models. Through increased government involvement Keynes believed policy decisions could be made to ensure full employment that might not happen in other circumstances (, 2014).
The monetary theorists do not put much value in the actions of government onto the economy. That is to say that they do not believe the government can do any good by changing fiscal policy. Monetary theorists believe that changes in the money supply are the best way to effect changes on an economy. They would prefer to increase production and growth by increasing the amount of money that comprises the money supply. And they would halt inflation by decreasing the amount of money that is in the money supply. To a monetary theorist, monetary policy makes the needed tweaks to an otherwise independent economic system whereas fiscal policy can become overbearing and slow the whole operation down (, 2014).

In 2008 when the global economy took a turn for the worst Canada managed to come out on top. This is thanks to the export of natural resources and commodities. The Canadian government immediately took charge and start making budget cuts in order to have a full recovery by 2015. Canada has a large threat in its path; its dependence on the outside world.
Canada fared much better than was expected while other countries throughout the world declined and fell into a recession. There are nine specific key indicators that are important to consider when talking about Canadian economy. These are employment, unemployment, composite leading index, housing starts, consumer price index, real gross domestic product,...

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