IntroductionCanada is among the great nations in the world. Since 2008, after the global financial crisis, its economy has proved to be one of the strongest developed economies around the world. By considering its gross domestic product (GDP) in current prices, the Canadian economy is believed to be the 9th largest economy in the world. The increasing development in Canadian economy has been facilitated by efforts of Canadian government and Bank of Canada. The Canadian government and the Bank of Canada have for along time employed several macroeconomic policies in development of Canadian economy.
The most common macroeconomic policies used by the Canadian government and the Bank of Canada are fiscal policies and monetary policies. This paper therefore seeks to evaluate how successful have the Canadian government and Bank of Canada been in running the Canadian economy for the past two years. It also seeks to describe and evaluate the main macroeconomic policies used by the Canadian government and the Bank of Canada over the past two years. The Canadian government and the bank of Canada have been very successful in running the Canadian economy.
Their success is well depicted by the steady growth of the Canadian economy since the year 2010. The Canadian government and the Bank of Canada through diversification of Canadian economy and strengthening of Canadian dollar have expanded the nation’s gross domestic product. The real gross domestic product has enhanced by 0.4% in the fourth quarter of 2011. This was after a one percent increase in real GDP in the third quarter. On average, the Canadian gross domestic product has been growing by 0.8% from 1961 to 2011.
The growth rate of Canadian gross domestic product can be illustrated by the following graph. The growth in Canadian gross domestic product in the first quarter has been facilitated by the government efforts to increase consumer spending and exports. The Canadian government managed to expand consumer spending on goods and services by 0.7% in the fourth quarter. It also managed to increase purchases of durable commodities by 2.1%. The Canadian government, through export and import promotion, has enhanced exports by 1.1% and imports by 0.5%. Promotion of exports and imports has enabled the Canadian industrial sector to grow in the forth quarter.
The government efforts to promote exports and imports have made both goods-producing and services industries to grow by 0.5% and 0.4% respectively in the fourth quarter. The promotion also expanded manufacturing industries, retail trade and extraction of oil and gas, thus enhancing the Canadian economic growth. The success of Canadian government and the Bank of Canada in running the Canadian economy can be seen in the way Canadian inflation has been controlled since 2011. The Canadian government and the Bank of Canada have for along time tried to stabilize inflation rate.
Canadian inflation rate was previously reported in March 2012 to be 1.9 percent. From 1915 to 2010, the Canadian economy recorded an average inflation rate of 3.26 percent, but from 2010 to Feb. 2012, the Canadian economy recorded an average inflation rate of 2.1%. This therefore shows how the Canadian government and Bank of Canada have been effective in controlling inflation rate. Inflation rate refers to persistent increase in price level measured against a standard level of purchasing power.
The most common measures of inflation are consumer price index (CPI) and gross domestic product deflator. Consumer price index measures consumer prices while GDP deflator measures inflation of the entire domestic economy. The following graph shows the fluctuation in inflation rate, which depicts an average of 2.1 percent from January 2010.