Thesis on "Economic Impacts of the Following on Canada"

Thesis 5 pages (1374 words) Sources: 5

[EXCERPT] . . . .

economic impacts of the following on Canada

Impact of Inflation on the Canadian Economy

Regarded as an economic phenomenon, inflation is perceived as a generalized, long-term increase in the level of prices and a reduction of the purchasing power of the currency in the respective country. Inflation has significant effects over the economy and over the interests of all economic agents, over the social and political climate, and over international economic relationships.

The size of the effects depends on the intensity of inflation and on the status of each economic agent. Some clearly lose something, while others may find themselves to have certain benefits from inflation.

Some of the elements that represent direct effects of high inflation represent wealth redistribution, social convulsions, decreased living standards for certain categories, economic information may lose some of its value, decreased savings and investments, production losses, and increased unemployment rate. Regarding income redistribution, any price modification implies modification of incomes for at least two economic agents, therefore a distribution modification and another income configuration for the economic agents in case (Phelps, 1970).

In order to better understand the economic impact of inflation, it is necessary to present the current economic situation that characterizes Canada. The country is a high-tech industrial society, with a market-oriented economic system. Over the past few decades, Canada experienced continuous economic growth, becoming one of the most stable and secure economies in the world.

However, the economic and financial crisis did not leave the Canadian economy untouched. In 2008, Canada's economic growth was significantly slower than before. The most affected sectors are the housing and the auto sector. It is expected that public finances will deteriorate in the following period.

In 2008, Canada's GDP purchasing power parity reached $1.307 trillion, with a GDP real growth rate of 0.6%. GDP growth rate reached 2.7% in 2007 and 3.1% in 2006. The unemployment rate reached 6.1% for a labor force of 18.18 million. Public debt reached 62.3% of GDP (CIA, 2009).

Inflation reached 1% in January 2009, but global macroeconomic conditions might determine an increase of inflation's level. However, the ideal inflation level is 2%, which means Canada's economy might benefit from an inflation increase, depending on its level.

Bank of Canada's policy is to target an inflation rate between 1-3%. The ideal pursued scenario involves a 2% inflation rate, which is considered to be core inflation for Canada.

But Canada has not always been in this monetary situation. Over the past decade, the country experienced several types and levels of inflation. Obviously, each of them had different repercussions on the country's economy.

Between the 1970s and the 1980s Canada's inflation was high and unstable. The impact consisted in significantly large and rising public deficits and debt. These were unsustainable at that point. The matter caused future economic turmoil and instability.

But things took a different turn since 1990s. The country's monetary policy started to focus around an inflation-control target. But controlled inflation was not enough. The situation had to be backed by a flexible exchange rate.

The economic impact of these measures was direct and quite rapid. The measures created a basis for economic stability, which led to economic development, a process continuously sustained, leading to the developed Canada of today.

High inflation and large deficits had a significant impact on Canada's economic capabilities. During the periods characterized by high inflation Canada's economy was a very unstable one, but not necessarily traversed by negative periods only.

Instead, during this period, Canada's economy was experiencing growth periods alternated with set-back periods. The same thing was observed regarding the country's employment. These issues are considered to be exaggerated.

Also, high inflation had another economic impact that consisted in the fact that it wasted "valuable economic resources -- resources that ought to be going into productive uses, but are instead diverted into hedging, as people seek protection from rising inflation" (Dodge, 2002).

This means that important sectors of the Canadian economy were deprived for long periods of time from important funds that might have produced accelerated development. This would have generated sustained economic growth, allowing Canada to reach much… READ MORE

How to Reference "Economic Impacts of the Following on Canada" Thesis in a Bibliography

Related Thesis Papers:

Canada US Relationship Thesis

Canada-U.S. Relationship

Canada and the United States enjoy the world's longest unprotected border, the world's largest trading relationship and a long history of close and cordial relations. The two nations… read more

Thesis 11 pages (3352 words) Sources: 10 Style: MLA Topic: Economics / Finance / Banking

---

Economic Impact of Legal and Illegal Immigrants on United States Term Paper

Immigrants: Economic Impact on the United States

The United States is a nation of immigrants. This is undisputed. But what has been the impact of migration on the U.S. economy?… read more

Term Paper 15 pages (4771 words) Sources: 6 Style: MLA Topic: Family / Dating / Marriage

---

Economics When the U.S. Economy Plunged Term Paper

Economics

When the U.S. economy plunged into recession in the second half of 2008, there was considerable concern north of the border in Canada about the prospects for that nation's… read more

Term Paper 7 pages (2364 words) Sources: 1+ Style: Harvard Topic: Economics / Finance / Banking

---

Financial Crisis on Canada Thesis

Financial Crisis in Canada

Canada is the world's 9th largest economy according to the World Bank

The economy is diverse, encompassing a highly-developed service sector, strong technology, abundant natural resources… read more

Thesis 15 pages (4978 words) Sources: 11 Style: MLA Topic: Economics / Finance / Banking

---

Influence of American Culture and Economics on Canadian Politics Thesis

American Culture and Economics on Canadian Politics

Merelman notes that the question of culture's role in politics is not a new question. Plato expelled poets from his Republic for fear… read more

Thesis 10 pages (2800 words) Sources: 6 Style: MLA Topic: Economics / Finance / Banking

---

View 100+ more related papers  >>