Strategies For Relieving The National Debt

1041 WordsMar 27, 20175 Pages
The Canadian government has many different strategies to relieving the national debt while being able to sustain the stability of the economy and its many markets. These different strategies include the government selling debts to the banks, wage and price increases, and fiscal and monetary policies. These policies are briefly mentioned and outlined in Chapter Eleven: Policy Matters. (DPE, 145,147) One strategy the government uses is selling their debts to other parties, usually the banks. It is a good technique because it keeps a constant cash flow within the controllers of our economy, being the government and the large banks. The government sells their debt away to the banks of Canada that way they have cash flow available for use. The…show more content…
Also with the inflation on the price of goods, the percentage of tax charged on each purchase will increase creating more profit for the government. Now that the government has an increase in cash flow, they can use this money to pay off some of the national debt or decide to reinvest the tax dollars into the economy or infrastructure. However there is a downside to constantly using this strategy. The government would not want to inflate prices too often because it could create a large GDP gap compared to the GDP of other countries. This gap would make it more difficult to trade goods with other countries. The only way trade would be fair with a large GDP gap would be if two countries trade different goods with each other of equal relative value, thus making the balance of trade zero, as explained in Chapter Ten: International Cheques and Balances. (DPE, 129) The government can also use one of two discretionary policies, either fiscal or monetary. Fiscal policy is where the government either increases taxes and decreases government spending or decrease taxes and increase government spending. This is a technique that is rarely seen in Canada as our tax rates do not change often. However I feel as though if the government were to increase taxes and decrease government spending it would be beneficial to the national debt as the government would save money by decreasing their spending
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