Chapter 8: Stabilization Policy

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.