Source:
http://www.cbc.ca/canada/nova-scotia/story/2009/04/01/ns-minimum-wage.html
Summary:
Because of the current recession, the provincial governments in Canada are coming up with ways to stimulate our current state of the economy. And one of the ways to ensure stimulation of the recession that the government came up with is to increase minimum wage. Statistically, over the past few years, the number of people working for minimum wages has increased in Nova Scotia. The new hourly wage, after a half a dollar increase, is $8.60. According to the provincial government, this will be the first of three wage increases over the course of a year and a half. By 2010, it is estimated that the minimum wage would be raised to $9.65 an hour.
Connection:
The connection between this article and to our textbook is wage control. Provincial governments control and monitor minimum wage. By increasing minimum wage, the government is able to encourage more people to spend because they earn more from their jobs. This will stimulate the economy as saving actually hurts it. The effect of this is price ceiling. By increasing wages, it will help boost the demands for goods and services. More jobs will be made available due to the increase in demands for things. The increase in minimum wage aids the economy’s inflation on prices.
Reflection:
I think increasing minimum wage is a great stimulus to regenerate our current recession. By increasing two dollars from now until 2010, it gives people more hope and money circulation. As a result, they will spend more providing more money circulation in the economy. In the eyes of a jobless person, an increase in wage will have them interested in applying for a job. Since, the demands for services and goods have increased, more jobs are available for the workforce.
Thursday, June 4, 2009
Tuesday, June 2, 2009
Chapter 7: Money and the Canadian Banking System
http://www.humanevents.com/article.php?id=31117
Summary:
This article is about the bailing out of the insurance bank AIG. According to the article, AIG received 165 million dollars in planned bonus and 170 billion dollars in taxpayer funds for their Bailout. This outraged many Americans because in a sense, they are being asked to share the debt among reckless Wall Street traders, as well as reckless and incapable Main Street borrowers. Also, this huge amount of bail out money could’ve been used for other projects, such as covering the electricity bill of every American household for one year or paying for a four-year education for two million American students at a public university, etc. Moreover, in this article, it states that as long as the capital of USA backs them up for their mistakes, lessons will never be made, and mistakes will never be learned from.
Connection:
The main connection of this article to our text book is bankruptcy. Our most recent economic depression is caused by the sub mortgage prime loans investing banks lend out. These banks decreased bank rates to a low rate and loaned out money to everyone, even people who do not have the ability to pay back. This action resulted in the severity of the economy today. What’s more is that according to the Fisher equation of exchange, the GDP will decrease due to the expected decrease of money supply and money circulation in the next 5 years. As well, the value of the legal tender of American money faces significant problems. Consumers will definitely lose confidence in banks and as a result, will save money rather than invest it in banks.
Reflection:
I think he recession did not affect the Canadian economy as much as it did to the American economy mainly because of the different banking systems in which the banks operate. Canada’s branch banking system is more reserved in terms of investments and loan huge amounts of money. The Canadian system which opposes the American’s unit banking system is also why our Canadian economy isn’t affected as much. The uniting banking that the Americans operate with loan out money even for the people who cannot repay their debt. Hence, the effects of bad loans hurt the American economy more. On the other hand, bad loans loaned by Canadians are affected less due to the Canadian bank’s reserved manner. In addition, the Canadian banks are monitored by government regulations, while US banks have limited government involvement. Initially, I thought that AIG did not deserve the bail out of such a huge amount of money. However, from the text, I learned that the reasoning behind the bailout is not just to help AIG from bankrupting but to restore taxpayers’ confidence in the banking system as a whole.
Summary:
This article is about the bailing out of the insurance bank AIG. According to the article, AIG received 165 million dollars in planned bonus and 170 billion dollars in taxpayer funds for their Bailout. This outraged many Americans because in a sense, they are being asked to share the debt among reckless Wall Street traders, as well as reckless and incapable Main Street borrowers. Also, this huge amount of bail out money could’ve been used for other projects, such as covering the electricity bill of every American household for one year or paying for a four-year education for two million American students at a public university, etc. Moreover, in this article, it states that as long as the capital of USA backs them up for their mistakes, lessons will never be made, and mistakes will never be learned from.
Connection:
The main connection of this article to our text book is bankruptcy. Our most recent economic depression is caused by the sub mortgage prime loans investing banks lend out. These banks decreased bank rates to a low rate and loaned out money to everyone, even people who do not have the ability to pay back. This action resulted in the severity of the economy today. What’s more is that according to the Fisher equation of exchange, the GDP will decrease due to the expected decrease of money supply and money circulation in the next 5 years. As well, the value of the legal tender of American money faces significant problems. Consumers will definitely lose confidence in banks and as a result, will save money rather than invest it in banks.
Reflection:
I think he recession did not affect the Canadian economy as much as it did to the American economy mainly because of the different banking systems in which the banks operate. Canada’s branch banking system is more reserved in terms of investments and loan huge amounts of money. The Canadian system which opposes the American’s unit banking system is also why our Canadian economy isn’t affected as much. The uniting banking that the Americans operate with loan out money even for the people who cannot repay their debt. Hence, the effects of bad loans hurt the American economy more. On the other hand, bad loans loaned by Canadians are affected less due to the Canadian bank’s reserved manner. In addition, the Canadian banks are monitored by government regulations, while US banks have limited government involvement. Initially, I thought that AIG did not deserve the bail out of such a huge amount of money. However, from the text, I learned that the reasoning behind the bailout is not just to help AIG from bankrupting but to restore taxpayers’ confidence in the banking system as a whole.
Saturday, March 7, 2009
Chapter 6: Determination of National Income
http://www.cbc.ca/money/story/2009/03/05/gmannual.html
Summary:
Even after bailouts worth of billions of dollars from the government, General Motors Corp (GM) is once again suffering from an economic crisis. According to this article, it is said that GM has a high chance of bankruptcy if they do not reform their plans anytime soon. General Motors Corp’s, on February 17th, planned to restructure their plan by laying off 47,000 workers, 4000 of whom are employed in Canada. Moreover, five factories that GM owns are also closing down. Their “inability to create sufficient cash flow” is the main reason why even after the bailouts, General Motors Corp is still in a financial crisis.
Connection:
The connection between this article and Chapter 6 is the circular flow of money. This is also the reasoning behind GM on the edge of bankruptcy. In the textbook, the circular flow of money describes if anytime there is less consumer purchasing, then it will hurt the business’ profits. However, when households start saving and investing money, businesses will take advantage of this act by laying off workers to maintain a market equilibrium and increase in GDP; households and businesses are interrelated. The jobs being laid down by GM due to the circular flow of money relate to the paradox of thrift. This explains that when GM employees are saving and investing their money, they are actually hurting their wallets as jobs are cut due to their act ions.
Reflection:
Before being informed of the circular flow of money, I believed that if we save and invest our money it benefits us. However, this is not the case; it actually disrupts the economy. When more people are saving, businesses like GM, start to lay off workers, hence they are actually harming their wallet and job. A great way to maintain market equilibrium and an increase in GDP is to encourage more spending in the economy; when more people are spending, more jobs are created as production rates increase. I think the only way for General Motors Corp to climb out of this crisis is to climb up in sales; the bailouts and loans did not help tremendously, therefore, if consumers spend more instead of setting aside their money, it will help GM pull away from the brink of bankruptcy.
Summary:
Even after bailouts worth of billions of dollars from the government, General Motors Corp (GM) is once again suffering from an economic crisis. According to this article, it is said that GM has a high chance of bankruptcy if they do not reform their plans anytime soon. General Motors Corp’s, on February 17th, planned to restructure their plan by laying off 47,000 workers, 4000 of whom are employed in Canada. Moreover, five factories that GM owns are also closing down. Their “inability to create sufficient cash flow” is the main reason why even after the bailouts, General Motors Corp is still in a financial crisis.
Connection:
The connection between this article and Chapter 6 is the circular flow of money. This is also the reasoning behind GM on the edge of bankruptcy. In the textbook, the circular flow of money describes if anytime there is less consumer purchasing, then it will hurt the business’ profits. However, when households start saving and investing money, businesses will take advantage of this act by laying off workers to maintain a market equilibrium and increase in GDP; households and businesses are interrelated. The jobs being laid down by GM due to the circular flow of money relate to the paradox of thrift. This explains that when GM employees are saving and investing their money, they are actually hurting their wallets as jobs are cut due to their act ions.
Reflection:
Before being informed of the circular flow of money, I believed that if we save and invest our money it benefits us. However, this is not the case; it actually disrupts the economy. When more people are saving, businesses like GM, start to lay off workers, hence they are actually harming their wallet and job. A great way to maintain market equilibrium and an increase in GDP is to encourage more spending in the economy; when more people are spending, more jobs are created as production rates increase. I think the only way for General Motors Corp to climb out of this crisis is to climb up in sales; the bailouts and loans did not help tremendously, therefore, if consumers spend more instead of setting aside their money, it will help GM pull away from the brink of bankruptcy.
Wednesday, February 25, 2009
Chapter 5: Economic Indicator
http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20090216.wjapanmarkets0216/business/Business/businessBN/ctv-business
Summary:
3.3% drop in Japan’s gross domestic produce has never been witnessed by the Japanese government. Since 35 years ago, Japan has never suffered from the gross domestic rate to shrink that fast. The reasoning behind this drop according to this article is that the global demand for exports have decreased; Japan’s economy relies heavily on exports, hence the contracting GDP value. Many Japanese companies were forced to cut jobs. This affected the unemployment rates greatly, as well as the market where fewer purchases were made by consumers. This will be Japan’s third consecutive GDP drop as stated by this article; Japan is officially in a recession.
Connection:
The connection between this article and our text book is the situation of demand-deficit unemployment. This means that workers are to be laid off due to the decreasing market demand of their product. In Japan, their GDP has declined for over three consecutive quarters now – declining through two consecutive quarters means a recession is going to take place. GDP measures the total goods and service value in the market in a given period of time. In Japan, they are experiencing declination of GDP meaning the goods and services they produce are not profitable and stable due to the fewer demand. The more a product is not wanted or not demanded, it corresponds to the decrease in unemployment and a weak economy.
Reflection:
The Japanese have one of the world’s largest exporting economies. Seeing that global demand of exported goods is not as high as before, I think the Japanese economy is going to suffer greatly if they continue to rely on exportations. Instead, I strongly believe the Japanese government should give out more jobs in the infrastructure industry seeing that the Japanese have a good communication industry and that the world still has demands for these networks. With more jobs created, people will have a source of income, and it helps limit the drop of unemployment rate. Moreover, if people have money then they will continue to purchase goods; this would aid in re-stimulating the market. Therefore, slowly but surely helping the Japanese economies recover from their recession.
Summary:
3.3% drop in Japan’s gross domestic produce has never been witnessed by the Japanese government. Since 35 years ago, Japan has never suffered from the gross domestic rate to shrink that fast. The reasoning behind this drop according to this article is that the global demand for exports have decreased; Japan’s economy relies heavily on exports, hence the contracting GDP value. Many Japanese companies were forced to cut jobs. This affected the unemployment rates greatly, as well as the market where fewer purchases were made by consumers. This will be Japan’s third consecutive GDP drop as stated by this article; Japan is officially in a recession.
Connection:
The connection between this article and our text book is the situation of demand-deficit unemployment. This means that workers are to be laid off due to the decreasing market demand of their product. In Japan, their GDP has declined for over three consecutive quarters now – declining through two consecutive quarters means a recession is going to take place. GDP measures the total goods and service value in the market in a given period of time. In Japan, they are experiencing declination of GDP meaning the goods and services they produce are not profitable and stable due to the fewer demand. The more a product is not wanted or not demanded, it corresponds to the decrease in unemployment and a weak economy.
Reflection:
The Japanese have one of the world’s largest exporting economies. Seeing that global demand of exported goods is not as high as before, I think the Japanese economy is going to suffer greatly if they continue to rely on exportations. Instead, I strongly believe the Japanese government should give out more jobs in the infrastructure industry seeing that the Japanese have a good communication industry and that the world still has demands for these networks. With more jobs created, people will have a source of income, and it helps limit the drop of unemployment rate. Moreover, if people have money then they will continue to purchase goods; this would aid in re-stimulating the market. Therefore, slowly but surely helping the Japanese economies recover from their recession.
Thursday, February 12, 2009
Chapter 4 Government in Canada
http://forum.canucks.com/lofiversion/index.php/t214430.html
Summary:
The article talks about the usage of equalization payment to help the provinces in need (the have-not provinces), and the effects it has on these provinces. For the first time in Canadian history, a sum of 347 million dollars will be received by Ontario through equalization payments. According to Jim Flaherty, finance minister, for Ontario to receive such a big amount of equalization payment shows how serious, unstable and unprofitable their economy is. Moreover, he states that Ontario is forced into economic hardship and will be receiving equalization payments for awhile because of the global economy crisis, unstable American dollar and their weak manufacturing industry. On the other hand, as of 2009, the most current report shows that British Columbia, Alberta and Saskatchewan do not receive these payments. Alberta is not affected by the economic crisis as much due to their oil industry. However, even Alberta is pushing for external assistance. Alberta and other richer provinces are asking for aid; this shows how serious the situation is.
Connection:
The connection between this article to our text book is the effect of the federalist system that Canada follows. Canada has equalization payments to make sure that different provinces have adequate revenues to offer reasonable and qualified service to their citizens. Usually, these payments of equalizations are only given to the Maritime Provinces because their economy is affected greatly since the Cod Fishery times. To show how much need of aid these Maritime Provinces are in, they are also given stabilization payments along with equalization payments to avoid declining of provincial tax revenue. Progressive taxation funds these equalization and stabilization programs, distributing the money to the weaker provinces. The weak American economy pulled the Canadian economy down as well, hence for the first time, a rich province like Ontario is giving external aid for equalization payments.
Reflection:
I have the same opinion as Jim Flaherty, finance minister. By putting out more job opportunities and encouraging more international trade, the Canadian economy will re-stimulate itself. I see equalization payments as a momentary solution to our weak economy. Ontario receiving external help through these payments in years to come, I believe, will give investors a sense of lost-faith because even our rich province is need of aid. If investors lose interest in investing in Canada then the economy will have a smaller chance of re-stimulating itself. This is a big dilemma for the Canadian Government. On one side, saving a rich provincial is necessary to save the Canadian economy in the long run. However, on the other side, by aiding rich provinces like Ontario shows the seriousness of the current problem in Canada to investors and international traders. Immediate actions should be taken right now, so Canada does not recess into a depression or else job losses and poverty will be hard to find a solution for.
Summary:
The article talks about the usage of equalization payment to help the provinces in need (the have-not provinces), and the effects it has on these provinces. For the first time in Canadian history, a sum of 347 million dollars will be received by Ontario through equalization payments. According to Jim Flaherty, finance minister, for Ontario to receive such a big amount of equalization payment shows how serious, unstable and unprofitable their economy is. Moreover, he states that Ontario is forced into economic hardship and will be receiving equalization payments for awhile because of the global economy crisis, unstable American dollar and their weak manufacturing industry. On the other hand, as of 2009, the most current report shows that British Columbia, Alberta and Saskatchewan do not receive these payments. Alberta is not affected by the economic crisis as much due to their oil industry. However, even Alberta is pushing for external assistance. Alberta and other richer provinces are asking for aid; this shows how serious the situation is.
Connection:
The connection between this article to our text book is the effect of the federalist system that Canada follows. Canada has equalization payments to make sure that different provinces have adequate revenues to offer reasonable and qualified service to their citizens. Usually, these payments of equalizations are only given to the Maritime Provinces because their economy is affected greatly since the Cod Fishery times. To show how much need of aid these Maritime Provinces are in, they are also given stabilization payments along with equalization payments to avoid declining of provincial tax revenue. Progressive taxation funds these equalization and stabilization programs, distributing the money to the weaker provinces. The weak American economy pulled the Canadian economy down as well, hence for the first time, a rich province like Ontario is giving external aid for equalization payments.
Reflection:
I have the same opinion as Jim Flaherty, finance minister. By putting out more job opportunities and encouraging more international trade, the Canadian economy will re-stimulate itself. I see equalization payments as a momentary solution to our weak economy. Ontario receiving external help through these payments in years to come, I believe, will give investors a sense of lost-faith because even our rich province is need of aid. If investors lose interest in investing in Canada then the economy will have a smaller chance of re-stimulating itself. This is a big dilemma for the Canadian Government. On one side, saving a rich provincial is necessary to save the Canadian economy in the long run. However, on the other side, by aiding rich provinces like Ontario shows the seriousness of the current problem in Canada to investors and international traders. Immediate actions should be taken right now, so Canada does not recess into a depression or else job losses and poverty will be hard to find a solution for.
Sunday, January 25, 2009
Chapter 3 Government Interventions in the Free Market System
Summary:
The article I read about talks about the reason behind the huge increase in oil prices; moreover, it also talks about decreasing oil pricing solutions. I believe the Canadian Government holds responsibility to the high cost of oil. According to this article, in Canada, there is too much government involvement in the oil industry. As a result, price controls, heavy taxes, and massive government interfering in energy markets to keep price down was what OPEC responded with. Therefore, less oil is produce by producers which caused a limited and insufficient amount of oil to meet the high demand; thus the high cost of oil. By this time, OPEC decided to try things a bit different. They decreased taxations for oil makers, as well as decreasing the number of regulations. With this change in technique, sufficient amount of oil met our high demand and made it affordable and profitable for both the buyers and suppliers. To summarize the article, the article says that the factor behind high oil prices, inefficiencies and insufficiencies in oil development is government involvement.
Connection:
Firstly, I believe the biggest connection of this article to the text book is the result of government intervention in the free market. Referring to this article, over the past few years, excessive government involvement causes increase oil price in the oil industry. Consequently, the condition of price ceiling occurs; the supply of oil is a shortage, and the supply can not meet the high demand. The solution to this problem is to shift the supply and demand curve according to the factors of Supply and Demand that of Chapter 2. In addition, government places excise tax on oil industries, which is why the cost of oil is at such a high cost. Therefore, market equilibrium can not be reached without government assistance. The government basically disrupts the natural functioning of the market, and it leaves us thinking that if initially government was not involved, then the problem of unstable and unreachable oil market equilibrium would not have occurred.
Reflection:
Oil is priced at $0.98/liitre. Compared to $1.50/litre a few months ago, it may seem that the reason behind the lowered price is due to reduction of government involvement. However, this is not true. The reasoning behind the drop is because of the global economic crisis happening right now and not the government. So people did not have as much to spend, which decreased the demand for oil world wide. I actually believe that the government did not take any actions listed in the article to lessen oil prices during the past decade because the government is profit-driven, meaning that they only want to make big profit margins through heavy taxations and strict regulations; the government does not care if we suffer through high oil prices.
Tuesday, October 28, 2008
Chapter 2: Supply and Demand
Article Link:
http://www.tradingtoday.com/26-oil-supply-demand
Summary:
The article states that the demand of crude oil will continue to exceed even though with its high prices. This is occurring because countries with major economic powers, like China and India are using the world’s supply of oil at an incredible rate. According to supply and demand, if the quantity demand for oil is too great, then suppliers would not be able to keep up. As a result, supply will gradually decrease because suppliers cannot produce enough to meet the demand. Because oil is becoming scarce, in many countries the oil production will reduce as the year goes on. In the 2008 report, reports say that the Cantarell fields in Mexico will only generate 1 million barrel a day. In Canada, we have fields that hold 1.7 trillion barrels of oil. But, the process of extraction is far too expensive for producers to continue digging oil up. To summarize, the article is trying to persuade us to turn our heads to alternative sources for oil.
Connection:
I think the main connection between this article and Chapter 2 is the theory of Supply and Demand. In class, I learned that the factors that affect demand are price of substitute, population and income. For instances, electricity is a substitute for oil, however, the price for it is high, as well, the life span of it isn’t as great. The population in China and India is in the billions and that is why the consumption rates in that part of the world is so exceeding. In addition to income, China is a country with strong economic power; hence, they’re capable of spending more money and resources in industrializing, which means that their demand for fuel is overpowering the other countries of the world.
Reflection:
It’s evident in the economy today that the oil prices have increase compared to previous years. However, the demand for crude oil right now has decreased because of the weak economy. Couple months ago, oil was $1.15/litre, but now; it dropped to $0.95/ litre. I say the oil prices will stay under $1.00/litre because drivers are buying less oil. Moreover, I think the production cost for extracting oil is too much, and producers should reduce the cost too balance out all the expenses. Maybe then, affording oil wouldn’t be such a hassle.
http://www.tradingtoday.com/26-oil-supply-demand
Summary:
The article states that the demand of crude oil will continue to exceed even though with its high prices. This is occurring because countries with major economic powers, like China and India are using the world’s supply of oil at an incredible rate. According to supply and demand, if the quantity demand for oil is too great, then suppliers would not be able to keep up. As a result, supply will gradually decrease because suppliers cannot produce enough to meet the demand. Because oil is becoming scarce, in many countries the oil production will reduce as the year goes on. In the 2008 report, reports say that the Cantarell fields in Mexico will only generate 1 million barrel a day. In Canada, we have fields that hold 1.7 trillion barrels of oil. But, the process of extraction is far too expensive for producers to continue digging oil up. To summarize, the article is trying to persuade us to turn our heads to alternative sources for oil.
Connection:
I think the main connection between this article and Chapter 2 is the theory of Supply and Demand. In class, I learned that the factors that affect demand are price of substitute, population and income. For instances, electricity is a substitute for oil, however, the price for it is high, as well, the life span of it isn’t as great. The population in China and India is in the billions and that is why the consumption rates in that part of the world is so exceeding. In addition to income, China is a country with strong economic power; hence, they’re capable of spending more money and resources in industrializing, which means that their demand for fuel is overpowering the other countries of the world.
Reflection:
It’s evident in the economy today that the oil prices have increase compared to previous years. However, the demand for crude oil right now has decreased because of the weak economy. Couple months ago, oil was $1.15/litre, but now; it dropped to $0.95/ litre. I say the oil prices will stay under $1.00/litre because drivers are buying less oil. Moreover, I think the production cost for extracting oil is too much, and producers should reduce the cost too balance out all the expenses. Maybe then, affording oil wouldn’t be such a hassle.
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