3-4 pages economic essay with graph

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Title_Canadianeconomyundercovid-19.docx

Title: Canadian economy under covid-19

First paragraph: Intro

1. Introduce the epidemic and declare that the severity of the epidemic has caused economic losses to many countries. (need some resource examples)

2. It shows that Canada's economy is also suffering a major blow. First of all, the unemployment rate will rise greatly, and the employment will become larger, because many companies are laying off workers, and some companies can't bear the economic pressure and go bankrupt, which will increase the number of unemployed. (here we need to add the information).

3. Then Canada's GPD will decline, and growth rate will also decline (you need to compare the data with Canada's GDP in this quarter, growth rate and last quarter's GDP and growth rate Statistics Canada: it can be found.)https://www.statcan.gc.ca/eng/start

Then explain: first of all, Canada's GDP is bound to decline, because most companies have closed their offices and factories have stopped production due to the impact of the epidemic (need some information to explain). GDP is defined as all goods and services produced by the whole country. If the factories stop production, it means that the output will decline, which means GDPFor example, if there is no domestic production of goods, many products will be imported. If there are more imports and fewer exports, net export will decline and GDP will decline.GDP growth rate is likely to decline, possibly negative, because the impact of the epidemic on Canada's GDP will decline, and the growth rate will decline or negative growth.

4. In addition, people will feel obvious inflation. As a result of the short-term epidemic, supply will decrease when the production is reduced. The supply curve will shift to the left and price will rise, so inflation will rise.Y < yn the economy of the whole country will enter a recessionary gap. The rise in prices has led to a decline in people's purchasing power.BOC (Bank of Canada) has cut interest rates by reducing the overnight rate (information or news of interest rate reduction), which greatly increases the money supply.BOC is now cutting interest rates in order to stimulate consumption. If there is consumption, there will be production, there will be employment, and if there is employment, there will be income. BOC is trying to improve people's income to offset inflation to maintain its core values with respect to inflation.

5. Theme: due to the outbreak, Canada is in an economic crisis, and the country with declining GDP has entered a recessionary gap. However, the Bank of Canada and the Canadian government will use fiscal policies and Monetary policies to make the country's economy return to normal.

Section 2: interest rate and nominal exchange rate

First of all, there are two kinds of interest rates: nominal interest rate and real interest rate

First of all, the impact of the epidemic on the nominal interest rate.BOC (Bank of Canada) has cut interest rates several times (for specific data, please refer to Bank of Canada:https://www.bankofcanada.ca/

)The purpose of BOC's interest rate cut is to stimulate consumption and make it difficult for the whole country's economy to enter into reception suddenly. The process of stimulating consumption is that when BOC cuts interest rates, people will save less money and people will have more cash in their hands, and the national consumption level will rise to achieve the result of rising GDP. The real interest rate will decrease with the decrease of the nominal interest rate. Because real interest rate = nominal interest rate – expansion rate.

2. Secondly, the Canadian dollar will depreciate during the epidemic (information is needed here.)Reason: due to the serious epidemic in Canada, the closed customs and the decrease of import and export trade (information is needed here), the demand for Canadian currency will drop, so the nominal exchange rate will drop in a straight line. For Canadians, in order to increase their income, they will choose to invest overseas in other countries where the epidemic is not serious, so as to increase the demand for foreign currency, and the nominal exchange rate will naturally decline. (data required)

3. Conclusion: both the interest rate and the nominal exchange rate will decrease.

The third section: classic economy and Keynesian economy

1. Classic economists believe that currency is neutral. When money supply changes, it only changes nominal variable (such as wave,)Because in a short period of time, the epidemic causes the country to enter the reception, which will generate a recursive gap in the ad / as a model. BOC saves the country's economy by reducing interest rates. Because the classic economist advocates that when Ms becomes larger, only the nominal will not change the real variable, so for example real income, employment(many more can be found in PPT) these real variables will not change. Price and income will change according to the BOC's interest rate reduction policy. These results will lead to ad rising GDP, which will try to approach the potential level of GDP and keep the economy stable.

2. Keynesian economists' don't think the government's measures and BOC policies have much impact on the economy. They think that in the short term, the government should not intervene and let the market recover itself. When the epidemic is over, the government will often adjust itself to long-run equity

Paragraph 4: Solutions

1)Fiscal Policies

The government will increase its spending and make g rise, leading to ad rising back to long-run equilibrium. I don't know much about this part, but it's also in Chapter 14. Please complete the process. Thank you

2)Monetary Policies

BOC uses three methods to increase MS, which causes the ad to rise back to long-run equilibrium. In Chapter 10 and Chapter 14, please write down the three methods in detail.

Paragraph 5: conclusion