http://www.cbc.ca/news/background/budget2008/issues-ei.html
Bracing for downturn?
For the past sixteen years, Canada has been having an uninterrupted job growth allowing $54 billion to be stored in the Employment Insurance account. The current Conservative government is preparing for the difficulties ahead caused by the recession in the United States by setting aside $2 billion to quickly help pay any surge in payouts caused by an economic downturn. Also, Ottawa is creating an independent Crown corporation called the Canada Employment Insurance Financing Board (CEIFB) to store future Employment Insurance account surpluses. This act is an attempt by the government to increase the predictability of setting EI premiums and benefits.
In chapter 8 we learn about automatic stabilizers which influence economic conditions. Employment insurance is one of them. The employment insurance takes out money from people’s paychecks and returns it to them in times of unemployment. Since Canada has been having a success in job growth, it is not surprising that Canada has accumulated $54 billion stored in the Employment Insurance account. This money is used as an economic stabilizer by giving money to the unemployed incase there is a sudden spike in job loss. This causes the GDP to decline less than if there were no aid at all.
I think that it is great to know that the Canadian government is prepared to help the country incase there is a downturn in the economy. With $54 billion stored away, any harm caused to the economy by a sudden spike in job reduction can become minimal or even negated. Now people do not have to worry as much about the events in the United States because if they lose their jobs, then they will receive Employment Insurance benefits to help cover them. In the end, it doesn’t affect me directly, but I can see how it will be a huge benefit to others.
Thursday, May 22, 2008
Sunday, May 4, 2008
Chapter 7 Blog
http://www.cbc.ca/money/story/2008/03/04/bankofcanada.html
Bank of Canada opts for aggressive interest rate cut
The Bank of Canada reduced their lending rate by half a percentage to 3.5% in order to prevent the weakening U.S. economy from greatly affecting Canada. Analysts have thought the rates would decrease from anywhere between 0.25% to 0.5%, and that the 0.25% would be more likely seeing as the domestic demand in the Canadian economy was still strong, but the central bank said Canada’s economy has shown signs of weakening within the last two months. Also, the bank said the recession in the U.S. residential housing market is damaging the other parts of the U.S. economy and as a result, increasing the risks in damaging Canada’s economy.
In chapter 7, we learn about the creation of currency and the function of the Bank of Canada. As seen in this news article, the Bank of Canada determines actions in order to minimize the effects of dramatic changes that have a chance of affecting Canada’s economy such as the recession that the United States are experiencing. By reducing the lending rate by half a percentage, it will increase the amount of money that people will have allowing them to keep the aggregate demand stable and therefore the aggregate supply within Canada will remain the same.
I think that the Bank of Canada has made a good decision in reducing the lending rates by half a percentage. Canada does almost all their international trading with the United States, which currently is in a recession, will greatly hinder the Canadian economy in the end. By reducing the rate, individuals will have to pay back less to banks for the money they borrow which will slightly increase the aggregate demand compared to before the drop. I would have to say anything that would help maintain demand is a good idea during these times of economic hardships. Although the decrease in rate will not completely stop the effects of the American slump, it will act as a slight buffer to reduce the damages done.
Bank of Canada opts for aggressive interest rate cut
The Bank of Canada reduced their lending rate by half a percentage to 3.5% in order to prevent the weakening U.S. economy from greatly affecting Canada. Analysts have thought the rates would decrease from anywhere between 0.25% to 0.5%, and that the 0.25% would be more likely seeing as the domestic demand in the Canadian economy was still strong, but the central bank said Canada’s economy has shown signs of weakening within the last two months. Also, the bank said the recession in the U.S. residential housing market is damaging the other parts of the U.S. economy and as a result, increasing the risks in damaging Canada’s economy.
In chapter 7, we learn about the creation of currency and the function of the Bank of Canada. As seen in this news article, the Bank of Canada determines actions in order to minimize the effects of dramatic changes that have a chance of affecting Canada’s economy such as the recession that the United States are experiencing. By reducing the lending rate by half a percentage, it will increase the amount of money that people will have allowing them to keep the aggregate demand stable and therefore the aggregate supply within Canada will remain the same.
I think that the Bank of Canada has made a good decision in reducing the lending rates by half a percentage. Canada does almost all their international trading with the United States, which currently is in a recession, will greatly hinder the Canadian economy in the end. By reducing the rate, individuals will have to pay back less to banks for the money they borrow which will slightly increase the aggregate demand compared to before the drop. I would have to say anything that would help maintain demand is a good idea during these times of economic hardships. Although the decrease in rate will not completely stop the effects of the American slump, it will act as a slight buffer to reduce the damages done.
Thursday, April 10, 2008
Chapter 6 Blog
http://www.cbc.ca/money/story/2008/04/09/manitoba-budget.html
Manitoba budget boosts spending by $395 Million
Manitoba’s economy is doing exceptionally well to the point where the government is willing to increase spending by $395 million. Finance Minister Greg Selinger is funding an extra $47 million into healthcare to reduce the waiting periods and to enhance other health-related areas. He has also decided to help the environment by funding $13 million for the ecoTrust funds. Selinger wanted to prepare Manitoba industries from the struggling U.S. economy by providing a buffer of eliminating general corporal capital tax. It is expected that businesses will save $25 million annually which will negate the income loss from the slow U.S. economy.
In this chapter, we are studying the impact of factors that influence a dramatic change in the flow of money. The slowing U.S. economy will reduce the aggregate demand for goods from Canada which will end up lowering business profits and ultimately having people being laid off. Also, the GDP will greatly be affected which will probably be another sign showing that unemployment is increasing if it were to happen. To equalize the GDP loss from the U.S. economy, Selinger has decided to decrease taxes for companies and also to spend an extra $395 million. The increase in spending will increase the aggregate demand therefore keeping GDP up. The decrease in taxes for companies will make it so that companies earn more money annually and therefore they can expand and have more workers rather than laying people off. With the increase of workers and the money that people can spend, GDP will be increased rather than decreased.
I think that Selinger made the right decision to increase the government’s spending in Manitoba by $395 million because it will act as a good buffer to prepare Manitoba’s economy from the decrease in demand from the United States. Also, the decrease in taxes for businesses will ensure that they will not suffer any profit losses and therefore people would not have to be laid off as a result. With these decisions made, the economy should not change at all and should remain the same throughout now until the nearby future.
Manitoba budget boosts spending by $395 Million
Manitoba’s economy is doing exceptionally well to the point where the government is willing to increase spending by $395 million. Finance Minister Greg Selinger is funding an extra $47 million into healthcare to reduce the waiting periods and to enhance other health-related areas. He has also decided to help the environment by funding $13 million for the ecoTrust funds. Selinger wanted to prepare Manitoba industries from the struggling U.S. economy by providing a buffer of eliminating general corporal capital tax. It is expected that businesses will save $25 million annually which will negate the income loss from the slow U.S. economy.
In this chapter, we are studying the impact of factors that influence a dramatic change in the flow of money. The slowing U.S. economy will reduce the aggregate demand for goods from Canada which will end up lowering business profits and ultimately having people being laid off. Also, the GDP will greatly be affected which will probably be another sign showing that unemployment is increasing if it were to happen. To equalize the GDP loss from the U.S. economy, Selinger has decided to decrease taxes for companies and also to spend an extra $395 million. The increase in spending will increase the aggregate demand therefore keeping GDP up. The decrease in taxes for companies will make it so that companies earn more money annually and therefore they can expand and have more workers rather than laying people off. With the increase of workers and the money that people can spend, GDP will be increased rather than decreased.
I think that Selinger made the right decision to increase the government’s spending in Manitoba by $395 million because it will act as a good buffer to prepare Manitoba’s economy from the decrease in demand from the United States. Also, the decrease in taxes for businesses will ensure that they will not suffer any profit losses and therefore people would not have to be laid off as a result. With these decisions made, the economy should not change at all and should remain the same throughout now until the nearby future.
Wednesday, March 26, 2008
Strong job growth cuts unemployment rate to 5.8%
There was an increase of 46,400 jobs reducing Canada’s unemployment rate to a low 5.8% in January. Economists had only predicted there to be 10,000 jobs leaving the unemployment rate at 6%, but the unexpected job growth led to the Canadian dollar to be at $1.0002 US. As a result, the Canadian economy is flourishing better than the United States’ economy leaving some economists predicting that US, being Canada’s top trading partner, would soon hinder the Canadian economy’s growth. Hourly wages increased by 4.9% well above the annual inflation rate of 2.4%. Eight provinces added jobs, with only New Brunswick and Nova Scotia to have an increase in unemployment.
Canada’s reduction in their unemployment rate will increase the GDP showing a stronger economy as money is continuously flowing around the country. Provinces such as New Brunswick and Nova Scotia may have had an increase in job loss due to seasonal unemployment since they heavily rely on fisheries being coastal areas. The only problem would be the increase in wages as it may cause a demand-pull inflation. With more money to spend people can buy more of what they want. As the demand increases, so does the price since the supply remains the same.
I think it is great the Canada’s unemployment decreased by such a large number since I’m a civilian in this country. With a huge 46,400 job increase, it shows that Canada is one of the better countries to live in with such a low unemployment rate. Also, the Canadian economy’s growth in strength resulting in the Canadian dollar rising close the American dollar will affect me since my family and I go on shopping trips to the US quite commonly during the longer breaks of no school. Recently I’ve been to the United States and it seemed everything was 75% there. With the value of the dollars being equal, it may be quite frequent for Canadians to start shopping in the States more often.
http://www.cbc.ca/money/story/2008/02/08/jobless-rate.html
Canada’s reduction in their unemployment rate will increase the GDP showing a stronger economy as money is continuously flowing around the country. Provinces such as New Brunswick and Nova Scotia may have had an increase in job loss due to seasonal unemployment since they heavily rely on fisheries being coastal areas. The only problem would be the increase in wages as it may cause a demand-pull inflation. With more money to spend people can buy more of what they want. As the demand increases, so does the price since the supply remains the same.
I think it is great the Canada’s unemployment decreased by such a large number since I’m a civilian in this country. With a huge 46,400 job increase, it shows that Canada is one of the better countries to live in with such a low unemployment rate. Also, the Canadian economy’s growth in strength resulting in the Canadian dollar rising close the American dollar will affect me since my family and I go on shopping trips to the US quite commonly during the longer breaks of no school. Recently I’ve been to the United States and it seemed everything was 75% there. With the value of the dollars being equal, it may be quite frequent for Canadians to start shopping in the States more often.
http://www.cbc.ca/money/story/2008/02/08/jobless-rate.html
Wednesday, February 20, 2008
Chapter 4 Blog - Government in Canada
http://www.cbc.ca/money/story/2008/02/15/telus-4q.html
Tax cuts drive Telus profit higher
In the fourth quarter of 2007, Telus posted that they had a 66% profit increase due to tax adjustments made by the government. From that quarter their revenue increased from $2.25 billion to $2.33 billion, which was a $159.6 million increase in profit. Telus had a tax rate of 33.6%, but they only had to pay 15.6% due to favourable tax settlements and reassessments from previous years. Finance Minister Jim Flaherty had a five year plan to reduce corporate income taxes across Canada by $14.1 billion. The expected federal rate in 2008 is 19.5%, a 1% reduction, and by 2012, decreasing to only 15%.
Businesses such as Telus are heavily taxed, and as seen a slight percentage change will altar the profit greatly. With billions of dollars in revenue, a one percentage change could save up to at least $10 million. Through favourable tax settlements and reassessments earned from previous years they were able to avoid paying the full load of 33.6%. With the lower amount of money that the government receives, they will be able to spend less on certain aspects such as Medicare and education.
It makes me wonder that if Telus had a tax reduction; it would mean that the government is receiving less money to fund for projects around Canada. Also, shouldn’t private businesses such as Telus be taxed at a high rate such as 33.6% because they still make profits in the millions? Where is it that the government will receive the extra funds since it seems Canada isn’t fully developed across the nation and any funding would easily make a difference to the society? I think that the tax rate should remain the same instead of decreasing. Even then, the profits for Telus should be increasing since their revenue increases annually due to population increase.
Tax cuts drive Telus profit higher
In the fourth quarter of 2007, Telus posted that they had a 66% profit increase due to tax adjustments made by the government. From that quarter their revenue increased from $2.25 billion to $2.33 billion, which was a $159.6 million increase in profit. Telus had a tax rate of 33.6%, but they only had to pay 15.6% due to favourable tax settlements and reassessments from previous years. Finance Minister Jim Flaherty had a five year plan to reduce corporate income taxes across Canada by $14.1 billion. The expected federal rate in 2008 is 19.5%, a 1% reduction, and by 2012, decreasing to only 15%.
Businesses such as Telus are heavily taxed, and as seen a slight percentage change will altar the profit greatly. With billions of dollars in revenue, a one percentage change could save up to at least $10 million. Through favourable tax settlements and reassessments earned from previous years they were able to avoid paying the full load of 33.6%. With the lower amount of money that the government receives, they will be able to spend less on certain aspects such as Medicare and education.
It makes me wonder that if Telus had a tax reduction; it would mean that the government is receiving less money to fund for projects around Canada. Also, shouldn’t private businesses such as Telus be taxed at a high rate such as 33.6% because they still make profits in the millions? Where is it that the government will receive the extra funds since it seems Canada isn’t fully developed across the nation and any funding would easily make a difference to the society? I think that the tax rate should remain the same instead of decreasing. Even then, the profits for Telus should be increasing since their revenue increases annually due to population increase.
Friday, January 18, 2008
Chapter 3
U.S. lumber industry questions Harper's $1B aid fund
Stephen Harper is making a decision on having a one billion dollar aid fund for the Canadian communities that aren’t flourishing as well. These are mainly the unemployed workers in forestry, fishing, and manufacturing. The American lumber industry is against Harper’s decision and claim that the act is be a violation of the 2006 Canada-U.S. Softwood Lumber Agreement. The U.S. Coalition for Fair Lumber Imports thinks that Stephen Harper is attempting to reduce the liabilities of Canadian companies, but the government claims they are investing the majority of the money on job retaining and community infrastructure instead. The Coalition does not have hard evidence yet, but they are continuing in having a watchful eye on the events.
The government’s rationale for deciding in investing one billion dollars to fund certain Canadian communities may be for unmet public goods and income distribution. People who are unemployed will receive more benefits and as a result, they may end up finding a job. Areas and infrastructure will be fixed and built benefiting the community. By paying workers to build and fix roads or other transport systems around Canada, third parties benefit as well. With more and better roads, people will have an easier way of getting around. Another reason might be because the government is trying to gain popularity, or they are seeing a downturn in Canada’s economy so in order to prevent that from occurring, they are spending a billion dollars.
I think it’s great that the government is spending one billion dollars in aiding communities around Canada, but if what the Coalition say is true then it might not be as beneficial in the long run. If money is spent on lowering the liabilities of Canadian companies, then Canadians will be able to mass sell their products at a lower price, diminishing all other competitors. As a result this may damage USA’s economy and in return damage Canada’s economy because both countries are so tightly connected with one another. Other than this problem, the one billion dollar investment will create jobs for the unemployed.
Stephen Harper is making a decision on having a one billion dollar aid fund for the Canadian communities that aren’t flourishing as well. These are mainly the unemployed workers in forestry, fishing, and manufacturing. The American lumber industry is against Harper’s decision and claim that the act is be a violation of the 2006 Canada-U.S. Softwood Lumber Agreement. The U.S. Coalition for Fair Lumber Imports thinks that Stephen Harper is attempting to reduce the liabilities of Canadian companies, but the government claims they are investing the majority of the money on job retaining and community infrastructure instead. The Coalition does not have hard evidence yet, but they are continuing in having a watchful eye on the events.
The government’s rationale for deciding in investing one billion dollars to fund certain Canadian communities may be for unmet public goods and income distribution. People who are unemployed will receive more benefits and as a result, they may end up finding a job. Areas and infrastructure will be fixed and built benefiting the community. By paying workers to build and fix roads or other transport systems around Canada, third parties benefit as well. With more and better roads, people will have an easier way of getting around. Another reason might be because the government is trying to gain popularity, or they are seeing a downturn in Canada’s economy so in order to prevent that from occurring, they are spending a billion dollars.
I think it’s great that the government is spending one billion dollars in aiding communities around Canada, but if what the Coalition say is true then it might not be as beneficial in the long run. If money is spent on lowering the liabilities of Canadian companies, then Canadians will be able to mass sell their products at a lower price, diminishing all other competitors. As a result this may damage USA’s economy and in return damage Canada’s economy because both countries are so tightly connected with one another. Other than this problem, the one billion dollar investment will create jobs for the unemployed.
Sunday, November 25, 2007
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