Discuss the current state of the macro economy in Canada.

Question 1:  Overview of the Macro economy: Interpretation  (25 marks)

Please discuss the current state of the macro economy 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.

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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).

(GDP is themonetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. GDP = C + G + I + NX where: ” C ” is equal to all private consumption, or consumer spending, in a nation’s economy” G ” is the sum of government spending” I ” is the sum of all the country’s businesses spending on capital” NX ” is the nation’s total net exports, calculated as total exports minus total imports. (NX = Exports – Imports) Unemployment occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate. This is the number of unemployed persons divided by the number of people in the labor force)

Question 2: Legislative Overview (15 Marks)

Please discuss 2 important institutions in Canada responsible for conducting fiscal and monetary policy, name the Department of Finance and the Bank of Canada.  What are the roles of each and what are each responsible for obtaining?  What are the responsibilities of each institution and what tools do they have at their disposable to impact the economy?  Can you say that their objections are in tandem with one another or due they sometimes conflict?

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