Fiscal Policy In Alberta's Economy

Income Assistance rates in British Columbia have been stuck at a paltry maximum of $610 for a single employable individual for the past 10 years. Although the cost of living has steadily increased, Income Assistance rates have remained stagnant. The current social welfare policies adopted by the Canadian Government in general and the provincial Government of British Columbia in particular are reflective of the strong liberal political ideology that has taken root in Canadian society. A political belief system that puts profit and economic growth above social equality and prosperity for all, is one that is in desperate need of repair. The current policies that govern

From this graph, the Canadian economy has clearly experienced significant real growth since 2012. Even still, the quarterly growth of real GDP from 2013 to the present seems to be decreasing, from 1% in the first quarter of 2013 to just 0.2% in the most recent quarter. This indicates that, while the Canadian economy is recovering, there are

With a low, stable rate of inflation, unemployment rate fluctuating within a couple percentage points, and job creation continuing to rise, indications are that Canada’s economy is thriving. While the Great Recession of 2008 was disastrous to its southern neighbor, Canada managed to keep its economy from tanking in tandem. Canada’s monetary, fiscal, and government policies are

Since the 1990s, Canada’s monetary policy has been built on a framework of stabilizing inflation at a target rate of two percent (Bank of Canada n.d.). Through expansionary or recessionary monetary policy, Canada must maintain its inflation rate to ensure that inflation is manageable. Canada’s currency, the

1. Fiscal policy is defined as "the use of government spending and taxation to influence the economy" (Weil, 2008). All government spending influences the economy in some way, but the amount of spending and where that spending is directed will have different types of effects on the health of the economy. The same can also be said for taxation who is taxed and how creates incentives that guide the course of the economy.

The creation of Macroeconomics had two distinctive purposes (ACDCLeadership, 2014). These two purposes provide a measurement for the economy and act as a resolution for problematic situations (ACDCLeadership, 2014). There are three aspects which account for the measurement of the economy (ACDCLeadership, 2014). These three aspects are a recession, an inflationary gap, and full employment (ACDCLeadership, 2014). When a recession occurs there are three courses of action which can be applied to the situation (ACDCLeadership, 2014). The first course of action is no policy, which is to take no course of action and wait the period out (ACDCLeadership, 2014). When there is a period of high unemployment, no policy, causes wages and cost to go down while aggregated supply will increase stabilizing the economy back at full employment (ACDCLeadership, 2014). The second policy that could be implemented is fiscal policy which focuses on government spending and taxation (ACDCLeadership, 2014). In the occurrence of a recession, to stimulate the economy government spending is increased, while taxes are cut (ACDCLeadership, 2014). Lowering taxes increases the consumer response causing aggregated demand to increase (ACDCLeadership, 2014). The third course of action is monetary policy which is the control of money supplied to cause a shift in aggregated demand (ACDCLeadership, 2014). The money supplied is increased causing a decrease in the amount of interest rates, which will increase the

Lowering or raising interest rates is one of the most common methods used by the government to have an impact upon the economy. When the economy is sluggish, the Federal Reserve Bank lowers interest rates, to encourage consumers to borrow more and spend more. It also lowers the discount rate, or the rate at which it lends money to institutions within the federal banking system, which gives banks more assets to lend. In contrast, when it wishes to slow down economic growth because of fears of inflation, it will raise the interest rate, to encourage consumers to borrow more and it will raise the discount rate as well. "The federal funds rate is the central bank's key tool to spur the economy and a low rate is thought to encourage spending by making it cheaper to borrow money. The Fed has kept the rate near zero since 2008" and has resolved to continue to keep rates low until at least 2013 (Censky 2011). For borrowers, such as people who are taking out student loans and car payments, this is good news.

The first topic of discussion is Expansionary Fiscal Policy and how the government uses the policy to affect the economy. Expansionary Fiscal Policy is a type of policy which includes increase in government purchases, a supple decline in taxes, while making an increase in transfer payments. These changes are designed to close the recessionary gap, while increasing economic stimulus packages and they aim to decrease unemployment. The government will introduce Expansionary Fiscal Policy during anticipation of contractions in the business-cycle. Increase in government spending will increase aggregate demand, and aggregate expenditures. The down side to Expansionary Fiscal Policy leads to budget deficits,

* The effectiveness of those fiscal policy recommendations from the Keynesian and Classical model perspectives.

Fiscal policy is the governments spending policies, which influences the conditions economy as a whole. With this policy, regulators can improve unemployment rates; stabilize business cycles, control inflation, and interest rates to control the economy. The government adjusts the spending and tax rates to influence the nation’s economy. The idea is to find the balance between public spending and changing tax rates, by increasing or lowering taxes may cause the risk of causing inflation to rise. If the economy had slowed down, unemployment will go up, so consumer spending will go down and businesses are not making enough profit. If the government decides to raise the economy by decreasing tax, it will give the consumers more money to spend while it is increasing the form of buying services from building roads or schools.

‘‘Fiscal policy is when the government adjusts its spending levels and tax rates to better influence and monitor their countries economy.’’ The main purpose of fiscal policy is to stimulate growth in periods during the business cycle such as a recession, and to keep inflation at a low and sustainable rate (In our government’s case, their target is 2%). Simply put, fiscal policy aims to stabilise the economic growth of a country, and to create a steady rate of economic growth, rather than falling into a bust and boom type cycle. Fiscal policy is based on the theories of John Maynard Keynes, who was a British economist. Commonly referred to now as Keynesian economics, it is the view that in the short-term, especially during periods such as recessions, economic output is influenced heavily by the total spending in the economy (aggregate demand).

First one must understand, that the money supply and interest rates are dependent upon one another meaning that if the Fed or Central Bank sets a goal to keep interest rates below 5%, then that will affect the money supply, because when the Federal Reserve wants to adjust the money supply it shifts interest rates. To reduce the money supply, the Fed will increase interest rates, meaning that fewer people will borrow money for projects, homes, or investments, because for many projects/ investments the rate of return may not be high enough to overcome the high interest rates, that they would have to pay back on their loan. When interest rates are high, then people tend to keep less funds in cash, and instead put money into savings/ bank accounts (banking institutions) where they can earn interest on their money. To increase the money supply (aka put more money into the economy), the Fed could reduce the interest rates, which would mean the rates of return on investment would not have to be so high, to make

| Advocates of active monetary and fiscal policy view the economy as inherently unstable and believe that policy can manage aggregate demand, and thereby, production and employment, to offset the inherent instability. When aggregate demand is inadequate to ensure full employment, policymakers should boost government spending, cut taxes, and expand money supply. However, when aggregate demand is excessive, risking higher inflation, policymakers should cut government spending, raise taxes, and reduce the money supply. Such policy actions put

Fiscal policy is a tool that is used by the government to correct fluctuations in the economy. Fiscal policy involves the government manipulating the level of government expenditure and/or rates of taxes to affect the level of aggregate demand (Sloman and Sutcliffe, 2001, p.633). The business cycle is inter-linked with this policy as it illustrates the short-term increase and decrease in the economy, noted as periods of recession and expansion. The idea of fiscal policy is simple when the economy is sluggish or too hasty the government will intervene by changing government spending on taxes. When the economy falls into a deep recessionary gap, the government can increase government spending and reduce taxes. This will increase the

During the depression era John Maynard Keynes wrote a book called the General Theory of Employment, Interest and Money which promoted fiscal stimulus as actions that taken to mitigate economic downturns. His ideas began a movement towards a more active role for government to uses measures within our economic systems. Thus, ideas of fiscal stimulus lead to decades of debate regarding the effectiveness of fiscal stimulus and the