Question 1: Overview of the Macroeconomy: Interpretation Please discuss the curr

Question

Question 1: Overview of the Macroeconomy: Interpretation

Please discuss the current state of the macroeconomy in Canada. In particular please discuss the growth rates and gross domestic product, the unemployment rate and lastly inflation. Please discuss how these variables compare to both the short and long run averages. In providing answers, please provide where data was obtained. You can use the internet or more authorative sources such as the Bank of Canada, Statistical Canada (Cansim) dataset or the IMF/World Bank websites. After you have ascertained this information, please make a determination as to whether the economy is at its long run equilibrium level (full employment), or whether it is in a recessionary or expansionary gap. (Hint: the economy is rarely at its long run level).  

Explanation / Answer

Economy of Canada Analysis

Growth rates and Gross domestic product

The current GDP for Canada stands at $43,349. The figure helps to show that living standards in Canada are somehow small compared to the living costs in the US. The low GDP can be attributed to the high rate of importation compared to the rate of exportation (Lavergne, 2014). As such, the country spends more than it earns which results in the low amount of GDP. To raise the GDP, the government should increase production activities in its economy.

Unemployment rate

Recent economic reports show that the rate of unemployment in Canada stands at 6.9 which has been reducing gradually over the years since 2011 where it was at 7.5. The low unemployment rate shows that most of the labor resources in Canada have been used purposefully to contribute to national income (Nathan et al, 2016). However, the government should ensure that the level of unemployment goes down further to raise the economy.

Inflation rates

The rate of inflation in Canada according to recent economic reports stands at 1.6. The rate of inflation has been reducing for the last few years from 2.3 in 2011 to the current rate (Nathan et al, 2016). That shows that the economy of Canada is stable and is self-sustaining. Additionally, the low level of inflation is an indicator that the county can compete with other countries in the global markets efficiently.

The expansionary state of Canadian economy

53% of the Canadian population is comprised of adults who are independent, and only 76% of them have stable jobs. That shows that the most of the country’s independent citizens are unemployed and are struggling to make ends meet (Lavergne, 2014). The government should, therefore, develop more industries that will ensure the rate of unemployment is substantially reduced. That way, the GDP, and inflation will change in favor of the Canadian economy.

References

Lavergne, R. P. (2014). The political economy of US tariffs: An empirical analysis. Elsevier.

Nathan, M., Kemeny, T., Pratt, A. C., & Spenser, G. (2016). Creative economy employment in the US, Canada and the UK: a comparative analysis.

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