Macroeconomic in Canada
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AN ANALASIS OF MACROECONOMICS IN CANADAINTRODUCTION In nations encyclopedia Canada is estimated as the seventh-largest economy in the world. The Canadian economy is considered very similar to the American economy but smaller in size. The nation has transformed from a rural economy which based on agriculture to an economy focusing on industry and services’The Canadian consists of three main economic sectors of Canada are agriculture, manufacturing and services. Data in 2019 from canadianvisa.org reported that Canada has a GDP of $1.6 trillion in which services contribute 69.8% to the GDP followed by industry at 28.5% and agriculture at 1.7%. Service industry includes the following sectors: transportation, economic, health care, construction, banking, communication, retail and tourism.The main manufacturing industries in Canada includes mining, gas, oil, machinery manufacturing, meat processing, wood paneling manufacturing, sawmill and wood production, seafood processing, manufacturing, ship and boat building and automobile manufacturing. In agriculture, beside grain harvesting, there are milking cows and Fresh food. Nowadays, Canada is the fifth largest agricultural exporter in the world when exporting to about 150 countries worldwide. Canada is the world’s number one producer and exporter of fresh and frozen wild blueberries. Canada exports 65% of its flax-seed to 53 countries. The information from worldatlas indicates that Royal Bank of Canada, Toronto-Dominion Bank Suncor Energy, Imperial Oil and Imperial Oil Bank of Nova Scotia are the top five companies in Canada by profit. Most of them do business in finance, banking and fuel resources. In the period of ten years, Canada has also emerged as one of the leading nations in the high-tech and computer industry. In spite of the small size of its population, the economy in Canada is one of the most prosperous in the world. Canada has an excellent nations infrastructure and modern factories and manufacturing plants. The most contribution to the growth of Canadian Economy is its variety of natural resources, including petroleum and natural gas, and a variety of metals and minerals. PRODUCTION OUTPUT PERFORMANCE ANALYSIS To measure the performance of an economy, we must look at the economy as the big picture. In his book, McEachern (2006) stated that macroeconomists are concerned not only with what determines such big-picture indicators as production, employment, and the price level but also with understanding how and why these measures change over time. Macroeconomists especially focus on what makes an economy grow because a growing economy creates more jobs and more goods and services. In general, faster growth means a higher standard of living. So, we can measure the Canadian economy’s size in different ways, such as the amount produced, the number of people working, or the inflation rate.GDP The most common yardstick to measure the performance of an economy is gross product which measures the market value of final goods and services produced in a particular geographical region over the course on one year.REAL GDP Unlike nominal GDP or GDP, real gross domestic product is a measurement of economic output that accounts for the effects of inflation or deflation. So, real GDP provides a more realistic assessment of growth in the performance of an economy than nominal GDP. Some economists said that without real GDP, it could seem like a country is producing more when its only that prices have gone up.
The present of this line graph give us an insight in how real GDP measures performance of the economy: Gross National Product in Canada[pic 1] In the given period from 2008 to 2018, we can see that Canada did not experience much economic fluctuations. So, there was no depression which is a sharp reduction in the nation’s total production lasting more than a year or a recession which is a decline in total output lasting at least two consecutive quarters or at least six months. However, real GDP of 2009 is the least. This is due to Canadian economy was also effected by the worst global recession in decades as the fallout of the most severe financial crisis since the Great Depression took a toll first on the U.S. and then on the rest of the global economy. From 2010, there was a steadily upward trend in the economy performance. Inspite of the mild decrease in two years 2015 and 2017, real GDP reached the peak in 2018. From the chart we can conclude that the Canadian economy has been growing more quickly than years before. The Canadian recession of 2008–09 generated sharp declines in output and employment and to require significant responses by Canadian policy-makers. To recover from that period, the government acted to minimize the disruptions caused by bank failures by forcing Canada’s banks to maintain lower debt-to-equity ratios than most of their counterparts abroad. Canadian authorities persuaded investors to accept and write off short-term losses in order to avoid the sort of “fire sale” price collapses observed elsewhere. The Bank of Canada and other central banks were obliged to maintain their policy interest rates at low levels as inflation remained weak. Production in Canada went up because of increases in the amount and quality of labor and capital, better technology and better fiscal policy which is the use of government taxing and spending powers to manage the behavior of the economy. Canadian people have to pay less tax than one in the US, which tends not to reduce economic activity and spending. LABOUR MARKET ANALASIS Another two macroeconomic problems are unemployment and inflation but not all unemployment or all inflation harms the economy (McEachern, 2006). According to him, those who want a job but can’t find one are unemployed. In our study guide, people who are at least 16yrs and not working or looking for a job (in the last four weeks) are consider unemployed. Additionally, some may have become so discouraged by a long, unfruitful job search that they have given up in frustration. Because these discouraged workers have dropped out of the labor force, so they are not counted as unemployed. However, all part-timers are counted as employed.