CANADIAN ECONOMY

Economics for Business ECO 4300 Spring 2012 Course Assignment

[Name of the Module]

Table of Contents

Introduction1

Discussion1

Financial Crisis and Canadian Economy2

Macroeconomic Policies5

Economic Prospects6

Conclusion7

References8

Economics for Business ECO 4300 Spring 2012 Course Assignment

Introduction

Canada, along with other countries of the world, is becoming interrelated with other countries of the world. However, the economy of Canada is affected by the degree to which those in other countries but goods and services, invest in the country, and lend funds to Canada when they are required (irpp.org). When goods and services are sold to other countries, employment is created and income is earned. Similarly, when people invest in Canada, businesses expand and improve, technology is developed and jobs are created.

When Canada requires money, it borrows same as other governments do. Also, the ability to pay back the money with interest rates depends on the confidence of foreign lenders on the economy of Canada (dol.gov). For generating the level of confidence in the economy, countries work hard to make their economies stable. Therefore, we will be analyzing past two years of the Canadian economy and macroeconomic policies used by the Canadian Government and the Bank of Canada over the last two years to understand the current economic situation of the Canada.

Discussion

The Canadian economy is a parliamentary democracy, that is, the Canadian government is patterned partly after the UK's; however, it also has a federal system like the United States. The federal government is responsible for national defence, relations of the country with other nations all over the world, the banking system of the country, the criminal justice system, and the indigenous people of Canada (ambest.com).

The provincial government is responsible for education, healthcare, and welfare sector of the country. The resources of the federal government has allowed the involvement in matters that were originally that of provincial such as employment, insurance and Medicare. Canada's major political parties include the Liberal Party, the Conservative Party, the Bloc Québécois, and the New Democratic Party (dol.gov).

The government's main priorities are to return Canada's debt to a downward trajectory, ensure the economy's financial stability and boost labour productivity. The energy sector will continue to be a major contributor to the economic stability of Canada (irpp.org).

Canada needs to raise productivity if it is to ensure sustainable rates of growth. Productivity growth in the last decade averaged only 0.7% (pwc.com). This was less than half the rate of the 1990s and far behind the rates seen in the USA. Without sufficient gains in productivity, the country would have to rely on more immigration. Government officials, however, have estimated that Canada would need to increase immigration to at least one million per year in order to maintain the present ratio of working people to retirees (pwc.com).

The country's potential rate of growth is likely to fall as the work force ages. The government needs to quickly return to its practice of balancing the budget in order to cope with the fiscal pressures of an ageing population.

Financial Crisis and Canadian Economy

Canada has one of the ...