...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? Please explain. tools available to the Federal government in managing the economy -- Fiscal and Monetary Policy Legislative Overview In Canada, the monetary policy is conducted by the Bank of Canada in which the government owned organization function with considerable independence from the federal government but is accountable to the parliament. Monetary policy in Canada is set by non-elected officials at Bank of Canada. Other decisions regarding the level of government revenue and expense is part of fiscal policy which is made by the Government of Canada with the approval of the parliament of Canada, as result monetary and fiscal policies are governed independent of each other (Frigon, 2010). The role of monetary policy is to preserve the value of capital by keeping inflation low, stable and foreseeable. This allows Canada to make spending and investment decisions with confidence, encourages long-term investment in Canada and contributes to better job openings and greater productivity with a better standard of living. Monetary policy in Canada has three characteristics:...
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...conclusion that will allow us to see not only the trends that have been prevalent over the past several years, but enable us to make an informed recommendation as to whether or not this market is a sound one to invest in based on our interpretation of trends and future projections. Qualitative Analysis The federal bond market has four key economic factors: interest rates, inflation rates, GDP per capita, and unemployment rates. Interest rates and inflation rates affect the yield-to-maturity of a bond as well as the bond price. GDP per capita and unemployment rates are factors that influence the demand for federal government bonds. Interest Rates The Bank of Canada Overnight Interest Rate affects the rate at which money is borrowed and lent, and as well as the price of a bond. The yield-to-maturity of a bond is directly related to this interest rate. As the interest rate increases, the yield-to-maturity increases. Therefore, when interest rates decrease, the price of a bond increases. This influence is much stronger in short-term bonds than in long-term bonds. This can be seen from the comparison of Canada...
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...an investor a. | a very low but safe return. | b. | ownership in corporations. | c. | the most risk possible in the market. | d. | a pure, speculative gamble. | ANS: B Q.The nominal interest rate minus the expected inflation rate equals the a. | potential interest rate. | b. | natural interest rate. | c. | true interest rate. | d. | real interest rate. | ANS: D Q During the 2000s, banks became complacent about making mortgage loans because a. | there was not a single bank failure in the decade. | b. | bank stocks performed better than the rest of the stock market. | c. | the banks counted on housing prices to keep appreciating. | d. | the government eliminated the FDIC. | ANS: C Q.When the overall level of business activity declines persistently, there is said to be a. | a revolution. | b. | a depression. | c. | a recession. | d. | inflation. | ANS: C Q. Economists who try to predict recessions find that recessions are a. | easy to predict. | b. | difficult to predict. | c. | easy to predict in recent years, but they were more difficult to predict before 2000. | d. | non-existent since 2000. | ANS: B Q In the long run, the Federal Reserve(Bank of Canada) can affect a. | inflation. | b. | output. | c. | unemployment. | d. | the exchange rate. | ANS: A Q The simple equation that can be used to predict how the Federal Reserve will change interest rates is known as a. | the Phillips relation. | ...
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...Chapter 15 Monetary Policy Xingfei Liu, Ryerson University Interest Rates and Monetary Policy 15 LEARNING OBJECTIVES LO15.1 Discuss how the equilibrium interest rate is determined in the market for money. LO15.2 List and explain the main functions of the Bank of Canada. LO15.3 List and explain the goals and tools of monetary policy. LO15.4 Describe the overnight lending rate and how the Bank of Canada directly influences it. LO15.5 Identify the mechanisms by which monetary policy affects GDP and the price level. LO15.6 Explain the effectiveness of monetary policy and its shortcomings. LO15.7 Describe the effects of the international economy on the operation of monetary policy. 2 15.1 The Market for Money and the Determination of Interest Rates 3 KEY GRAPH - The Demand for Money, the Supply of Money, and the Equilibrium Interest Rate FIGURE 15-1 (a) Transactions demand for money, Dt (c) Total demand for money, Dm and supply (b) Asset demand for money, Da Rate of interest, i percent 10 7.5 Sm 5 + 2.5 = 5 0 Dt 50 100 150 Da 200 Amount of money demanded (billions of dollars) 50 100 150 200 Amount of money demanded (billions of dollars) Dm 50 100 150 200 250 300 Amount of money demanded and supplied (billions of dollars) ...
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...TOR SERIES Helping you make sense of your investments The Inflation Effect: How will it impact you? Inflation is, in a nutshell, the rate at which the price for goods and services, and therefore the cost of living, rises. A chief measure of price inflation is the inflation rate, which is the annualized percentage change in a general price index (normally the Consumer Price Index) over time. Although inflation has been benign over the past several years, it can rise quite dramatically, as the chart below illustrates. For example, in 1981, inflation rose 12% from the previous year. 14% 12% 10% 8% 6% 4% 2% 0% 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Inflation can affect many aspects of our lives, from the cost of food to how much we need to spend on a new car or a new house. Though you may not notice over the short term, inflation can have a substantial negative effect on the value of your purchasing power and of your investment portfolio over the long term. Investors need to be aware of the risks and know what steps they can take to protect their portfolios from inflationary pressures. Source: Statistics Canada, December 31, 2013 AGF INVES TMENTS Inflation is beginning to rise in emerging markets, particularly in Brazil...
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...duties of the assignment will be divided and the manner in which it will be presented to me. Working together will ensure that all parts will be done well and on time. Question 1: Overview of the Macroeconomy: Interpretation (25 marks) 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). 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? Please...
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...the duties of the assignment will be divided and the manner in which it will be presented to me. Working together will ensure that all parts will be done well and on time. Question 1: Overview of the Macroeconomy: Interpretation (25 marks) 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). 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? Please...
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...ECO202 – Macroeconomics Case 2 Real Gross Domestic Product (Real GDP) for Canada, Japan United Kingdom (UK) and the United States (US) from 2007 continuing thru first quarter 2010, shows Japan as the only country to head upward. Following a downward movement first quarter 2008 by -0.25 %, hitting bottom second quarter 2009 before making a comeback ending the first quarter 2010 at a positive 4.22% from the previous year. Canada started the second quarter 2007 at 2.19%, staying on the positive side before falling with the other countries in the fourth quarter 2008, hitting there bottom during the during the middle 2009, ending the first quarter 2010 at 2.21% which is still below where they were in 2007. The United States and United Kingdom both had an increase in output and growth between 2007 and 2008 before being effected by the economic recession between 2008 and 2009. This was the period when the economic weakness had the maximum effect on all four countries (International Economic Trends). In terms of dollar amounts from 2007 thru first quarter 2010 the four countries real data is, United States $14.55 trillion in 2007, $14.61 trillion in 2008, $14.26 trillion in 2009, and $14.75 trillion in 2010. The Real GDP for Canada $1,235 billion 2007, $1,240 billion 2008, $1,185 billion 2009, and $1,215 billion 2010: The real GDP for Japan $4.4 trillion 2007, $ 4.37 trillion 2008, $4.14 trillion 2009, $4.51 trillion 2010. The real GDP for United Kingdom $2...
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...carefully before a decision is taken. However Bank of Canada (BoC) needs to increase the interest rates within the next six months based on the future market conditions. These conditions are fragile at the moment and a certain hypothesis cannot be made as to when the market will ease down. Looking at the domestic markets, BoC needs to gradually increase the interest rates. One of the major factors supporting this argument is to avoid another ‘housing bubble’. With ultra-low interest rates and loose credit underwriting standards the demand is more than the supply and hence people are piling up on debt which may lead the economy into another financial crisis. Hence that bubble needs to be broken. Adding to that, with low rates, individual investors, insurers and pension funds have no incentive to save which is adding to the problem of high consumption that plays a huge role in raising inflation. Another factor supporting this argument is helping private sector financial intermediation, which is basically a company that borrows from savers and lends to companies in need of investment. Technically, a wider gap between long term and short term yield rates make intermediation profitable. However since 2011, the US yield curves are quite flatter and the returns reflect the inflation rate making them not so attractive. Since the Canadian economic climate is shaped by US policy, the returns here have reduced as well but the inflation rates are well below the target making the margin on...
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...Analyzing Current Economic Issues Summary: Canada’s Exports Need to Be Reoriented to the New Global Economy, Says Bank of Canada Governor Mark Carney (Source: Bank of Canada) This article focuses on the reasons behind the downturn of the Canadian economy. Mark Carney believes that the combination of overexposure to the U.S. market and underexposure to faster-growing emerging markets is almost entirely responsible for Canada’s further loss in world market share over the last several years. The article also talks about what actions Canada can take in order to bring our economy back up, and how we should invest in our greatest resource, which are our people Summary: Canada GDP: July 2012 Saw 0.2 Per Cent Jump, Decline in Mining, Oil and Gas (Source: HuffPost Business) During the month of July, 2012 Canada has seen a 0.2 percent decline in its mining, oil and gas extraction. When looking at the different types of sectors, the manufacturing sector performed well with a 6.9% increase along with wholesale trade increase by 0.2%. Although Canada’s output has increased by 1.9%, its weakness still lies in the export sector with a $2.9 billion trade deficit for the month July. Summary: Unemployment rate holds steady at 7.4% (Source: CBC NEWS) According to Statistics Canada, Canada’s unemployment rate remained at 7.4% in October. In addition, October’s unemployment in 7/12 provinces and territories has increased especially in P.E.I with the highest unemployment rate increase...
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...Canadian mining- Impact of cost inflation and volatility and the road ahead Introduction With a 9.8% share of Canada’s GDP, the mining sector is critical to the future of the Canadian economy (Deloitte Report). Unfortunately, rising cost inflation, unprecedented volatility in commodity and energy prices and a strong Canadian dollar have negatively impacted the performance of this sector over the last year. This report seeks to uncover the drivers behind cost inflation and evaluate the hedging strategies utilized by Canadian companies to mitigate volatility through a case study of Barrick Gold. We will also examine the impact of tightening margins on the capital expenditure decisions of this company. Part 1: Cost Inflation Cost inflation in the mining industry has been driven by increases in both Operational expenses and Capital expenditures. Operational expenses have been driven by three factors 1) Wage Increases 2) Energy Costs and 3) Supply cost increases. Wages in this industry have increased dramatically over the past 10 years and the Canadian mining industry now boasts the highest wages of all industrial sectors in Canada. The average weekly pay for a mining worker in 2011 was $1,436, which surpassed the earnings of workers in forestry, manufacturing, finance and construction by 47%, 46%, 35% and 32% respectively (DELOITTE REPORT) Source: Mining Association of Canada – 2012 Facts & Figures Report http://www.mining.ca/www/media_lib/MAC_Documents/P...
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... iOn Tablet:Price strategies and Channel As technology becomes more advance and more efficient, Ion will service the medical fields in Canada. This will allow the doctors as well as hospitals to save time and will save the medical community money in administrative cost. The advancement of the tablet will help the community to place all documents related to patients, billing, and several other things in the computer system. The tablet will be easily accessibility by nurses and related officials to being fast, easily held, and the maneuvering within a doctor’s office or a hospital. The iOn will help Canada medical field to achieve this objective. Justification Market Sustainability Emerging technologies, particularly in the field of information and communications, are considered to be key drivers of future economic growth and present opportunities for the Greater Toronto Area (GTA) to attract foreign direct investment” (Global Research Study, 2011). Mobil technology sector is expected to revolutionize communications and business. The mobile applications market alone is expected to be US$58 billion worldwide business by 2014.The technology market is one of the hottest markets for Canada. The market has the infrastructure and strengths that support the technology development and supporting industries. In addition, Canada will be a great foreign investment opportunity because they lag behind for jurisdiction on mobile technology. Market Trends Over the...
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...NP ltd | Policy Brief | Canadian Immigration Reform: Macroeconomic Impacts | | | 7/28/2014 | | Table of Contents 1.0 Executive summary 2.0 Distribution List 3.0 Introduction 4.1 History 4.2 Policy 4.3 Federal Skilled Worker Program 4.4 Temporary Foreign Worker Program 4.0 Policy Outcomes 5.5 Labour Supply 5.6 Keynesian Theory – Aggregate Supply and Demand 5.7 Demands for Goods and Service 5.8 ADI/IA – Aggregate Demand and Inflation 5.9 Aggregate Supply 5.10 Multiplier effect 5.11 Money market 5.12 Short Term/Long Term Immigration Impacts on GDP 5.0 Policy Recommendations 1.0 Executive Summary The World Bank (2014) identifies Canada as having the 11th largest economy in the world with a gross domestic product (GDP) of $1.82 trillion in 2013 with a population of 35 million (Canada 2013). Immigration has been a crucial element of the development and generation of revenue for the country. Skilled workers play a vital role in the growth of the Canadian economy and range from general skilled workers, professionals as well as business immigrants and foreign investors. There is evidence demonstrating that immigrants do experience some challenges assimilating and this does cause some fiscal burden as more social support is required. Delays integrating into the social system impact numerous social resources...
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...1) Imagine that Canada, the US, and Mexico decide to adopt a fixed exchange rate system. What would be the likely consequences of such a system for (a) International businesses If the United States, Canada and Mexico were to adopt a fixed exchange rate system, most likely Canada and Mexico’s currency would be fixed to the United States’. Exchange rate risks discourage foreign investment. Currency fluctuations make it difficult for businesses to do financial forecasting. This has an effect on pricing and costs (International Exchange Rate, n.d.). The benefits for an international business operating under a fixed exchange rate in North America would be economic stability. If exchange rates were to become fixed and stabilized, I believe that international businesses would be more likely to trade and invest in North America. (b) The flow of trade and investment between all three countries? Fixed exchange rates eliminate competitive devaluations. Furthermore, monetary discipline is enforced and inflation is controlled. Canada, Mexico and the U.S. would be bound to maintain their exchange rate parity with each other and would thereby greatly reduce economic uncertainty. It is argued that this in turn would encourage greater foreign investment and more international trade with each other (Hill, 2013). 2) List the relative merits of fixed and floating exchange rate regimes. Fixed Exchange Rates: • Imposes monetary discipline by eliminating competitive devaluations ...
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...Business Analysis of Canada Canada is the leading country in the world for an American business to expand because of the very similar culture and business environment to the United States. Americans operating in Canada will feel very comfortable integrating into society and will be able to successfully execute their business objectives. The key areas of focus to effectively prove Canada’s compatibility with American firms is based on the following criteria: * Culture * Management * Population Demographics * Compensation * Religion * Ethics * Political Risk * Economy Culture Canada’s culture is very similar to the United States and by analyzing the cultural dimension theory by Geert Hofsted, American businesses will be able to understand how the similarities positively impact the success of American expatriates working in Canada. Hofsted’s cultural dimensions theory is an analysis of 5 specific factors that define the makeup of a society. Using a ranking system he was able to compare over 50 countries to Canada in all of these dimensions: power distance, individualism, uncertainty avoidance, career success and planning for the long-term horizon. Power distance This dimension measures the rigidity or flexibility of a country in terms of how organizations structure management and subordinate relationships. If a country has a high power distance, management structures seem to be more rigid or hierarchal and a chain of command system is...
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