Essay on How Much Inflation in Canada

Introduction

Canada belongs to the Commonwealth of nations. Its political system is federalism and parliamentary monarchy. Queen Elizabeth II is the head of state and the symbol of the country. After the 16th century, English and French colonists invaded one after another. It became an English colony in 1763. It became a British dominion in 1867. 1926 Britain recognized its 'equal status' and gained diplomatic independence. 1931 Canada became a member of the Commonwealth of nations, and its parliament was granted the same legislative powers as the British parliament. Canada has three levels of government: federal, provincial or territorial, and municipal (city). The official languages of Canada are English and French. Canada has a population of 37.06 million. The population is concentrated in the southern Great Lakes. Refstock is a small town on the Columbia River in British Columbia. It has pristine natural beauty, magnificent terrain, and endless snow. In addition, Toronto, the largest city in Canada, has beautiful scenery. Vancouver has a pleasant climate all year round.

In October 2019, Canadian exports stood at c $49.91 billion. Mainly miscellaneous goods, energy products, crude oil, refined oil, metal and non-metallic minerals, gold, agricultural and fishery products. From 1971 to 2019, Canadian exports averaged c $24.849 billion, reaching a record c $526.481 billion in May 2019 and a record c $136.6 million in February 1971. Canada imports 50.99 billion Canadian dollars, the main products are energy, crude oil, crude oil asphalt, natural gas, and so on. Canada's imports averaged c $21.21 billion, hitting a record c $523.997 million in March 2019 and a record c $11.12 million in January 1971. The current exchange rate is 1 Canadian dollar = 0.7587 us dollars, 1 us dollar = 1.3180 Canadian dollars. Overall, Canada's trade balance is positive because its exports exceed its imports on average.

Save your time!
We can take care of your essay

• Proper editing and formatting
• Free revision, title page, and bibliography
• Flexible prices and money-back guarantee

Place an order

The inflation rate in Canada has been stable for the past five years. There are two main causes of inflation: demand-pull and cost-push. In 2001, consumer demand and supply reached a balance, so inflation was the smallest on record. The main reason why unemployment is rising in Canada is that the government doesn't understand how small businesses can support the economy, and then they shrink or close. In addition, taxes in Canada are very high. Although Canada has stable politics and little corruption, red tape is rife between provinces and the federal government, and free trade between Canadian provinces is limited, which can be costly and reduce employment opportunities. Canada's GDP growth is slow because of the recession and there are not enough jobs to meet demand. Between 2000 and 2004, Canada's external debt was gradually reduced. It means the economy is making progress. Canadian bank lending rates fell in 2001, probably because they wanted more people to borrow.

Global Event 1----2007-2008 financial crisis

The financial crisis of 2007–08, known as the global financial crisis and the 2008 financial crisis, was a severe worldwide economic crisis. It began in 2007 with a crisis in the subprime mortgage market in the United States and developed into a full-blown international banking crisis with the collapse of the investment bank Lehman Brothers on September 15, 2008. Excessive risk-taking by banks such as Lehman Brothers helped to magnify the financial impact globally. Massive bailouts of financial institutions and other palliative monetary and fiscal policies were employed to prevent a possible collapse of the world financial system. The crisis was nonetheless followed by a global economic downturn, the Great Recession. The Asian markets (China, Hong Kong, Japan, India, etc.) were immediately impacted and volatilized after the U.S. subprime crisis. The European debt crisis, a crisis in the banking system of the European countries using the euro, followed later.

In 2008, after the financial crisis, the inflation rate was 1.16%. Because Canada is a developed country, the financial crisis had less impact on it. As a result, Canada's inflation rate is relatively stable. Canada's unemployment rate rose from 5.5% to 5.9%. Because of the financial crisis, many companies failed because they could not turn over the money, which led to an increase in unemployment. By 2008, Canada's GDP had grown by 1.0%. Because of the financial crisis, the global economy is in recession, and Canada's GDP growth is slow. Canada's external debt is 67.675%. Canada's external debt rate remained stable during the financial crisis. Because Canadian Banks have been hit so little. Canada's bank lending rate is 6.4%. Bank lending rates are up compared with previous years because so many people are borrowing to repay.

Global Event 2----U.S. 911 event

The September 11 attacks (also referred to as 9/11) were a series of four coordinated terrorist attacks by the Islamic terrorist group al-Qaeda against the United States on the morning of Tuesday, September 11, 2001. The attacks resulted in 2,977 victim fatalities, and over 25,000 injuries, and caused at least $10 billion in infrastructure and property damage. Additional people have died of 9/11-related cancer and respiratory diseases in the months and years following the attacks. The 9/11 attacks had immediate impacts. The attacks caused the Dow to drop nearly 700 points and deepened the 2001 recession. It also led to the War on Terror, one of the most prominent causes of government spending in U.S. history. The breakdown below includes immediate costs and physical damages of the attack, as well as the economic impact, homeland security, war funding, and future war costs. A 2002 report from the New York Comptroller's Office estimated the cost of 9/11's physical damage at $55 billion. Of that, $24 billion is the expected income of the lives lost. The value of the World Trade buildings alone was $8 billion. Computers, furniture, and cars cost $6 billion. The damage to utilities and the subway system was also $6 billion. Damage to other buildings cost $5 billion. The city spent $5 billion to treat injuries, including those suffered by first responders who inhaled the toxic dust. It spent $1 billion to clean up the area.

After the September 11th attacks on America, Canada's inflation rate was 0.72%, the lowest since previous years. As the U.S. economy was battered by the September 11 attacks, Canada's exports and imports increased, and its currency rose, so did inflation. In 2001, Canada's unemployment rate was 7.2 percent, which is more stable than ever. Canada's GDP growth rate was 1.77% in 2001, down from 2000, as U.S. Canada trade was affected by the September 11 attacks. In 2001, Canada's foreign debt was zero. Canadian Banks also borrowed at a lower rate of 3.0% in 2001 than in 2000. Because people have less need to borrow.

Global Event 3----Britain left the European Union

Brexit is the withdrawal of the United Kingdom (UK) from the European Union (EU). Following a June 2016 referendum, in which 51.9% voted to leave, the UK government formally announced the country's withdrawal in March 2017, starting a two-year process that was due to conclude with the UK withdrawal on 29 March 2019. As the UK parliament voted against or failed to ratify the negotiated withdrawal agreements, that deadline has been extended three times. The deadline is currently 31 January 2020.

In 2018, Canada's inflation rate was 0.31%. Compared with the past, the inflation rate is relatively low because of the sharp depreciation of the pound and the appreciation of the Canadian dollar due to Brexit. Canada's unemployment rate was 5.8% in 2018. This is relatively stable. In 2018, Canada's real GDP grew by 1.9%. Demand for Canadian exports has fallen as Britain's reaction to Brexit has weakened the European economy. In 2018, the external rate in Canada was 121.683%, an increase compared with previous years, because exports to Europe were affected and there was no large amount of money to pay off the foreign debt. The Bank of Canada's borrowing rate is stable at 3.2%.

Global Event 4----China–United States trade war

The China–United States trade war is an ongoing economic conflict between the world’s two largest national economies, China and the United States. President Donald Trump 2018 began setting tariffs and other trade barriers on China to force it to make changes to what the U.S. says are 'unfair trade practices'. Among those trade practices and their effects are the growing trade deficit, the theft of intellectual property, and the forced transfer of American technology to China.

Canada's annual inflation rate was 1.9 percent in October 2019, unchanged from the previous month and in line with market expectations. Canada's unemployment rate rose to 5.50 percent in June 2019 and to 5.40 percent in May 2019, possibly because of Chinese restrictions on agricultural imports to Canada. The real gross domestic product grew 1.3 percent in the third quarter, down from 3.7 percent in the previous quarter, as China tightened imports from Canada, which has been hit hard by a trade war with us. In addition, a large number of Chinese buyers are leaving Canada. In 2019, Canada's external interest rate was 2.03 million. That's up from a few years ago, as Canada's economy was hurt by trade. The Bank of Canada kept bank lending steady at 1.75 percent, still the highest level since December 2008. Because Canada has a lot of borrowers.

Global Event 5---- Federal Reserve Raises Interest Rates for First Time in Nearly a Decade

The Fed raised the federal funds rate from 0.25% to 0.5% on December 16, 2015, the first increase since 2006. After raising rates, the Fed will keep monetary policy loose to support job gains and keep inflation moving toward its target. Since late 2008, the Fed has kept the federal funds rate ultra-low near zero. The Fed sees U.S. economic growth, though not robust, continuing to rise, with confidence that core inflation of 2% will be achieved. The Fed took stock of the economy and picked the right time to raise rates.

Canada's inflation rate was 2.23% in 2015, stable compared with previous years. Because when the Fed raises rates, other countries will raise rates to keep their economies stable, keeping inflation stable. The unemployment rate is 6.91 percent, which is a bit higher than in previous years because the Fed is raising rates to get the dollar back into the United States, so there's less money in other countries, and companies are having a hard time growing, they're laying people off, and unemployment is going up. Canada's GDP growth rate was -0.6% because the federal reserve raised interest rates and a large amount of dollars flowed into the United States, making it difficult for Canadian companies to have enough capital chains to support their development. GDP can only go down. Canada's foreign debt is 15 million k. Relative to stability. Bank lending rates in Canada, at 1.5%, are also relatively stable.

Stabilization Policies Conclusion

1) Event 1:

The Canadian government bought c $25 billion of Canadian mortgage corporation bonds from Banks to increase bank lending and liquidity. In addition, the government decided to cut taxes by more than c $200 billion over the next five years and cut the federal corporate tax rate to 15%. Canada's central bank has cut rates twice in a month, cutting its benchmark rate by a quarter of a percentage point to 2.25%, the lowest level in more than four years.

2） Event 2:

The Canadian government has made policies to stabilize people's fear of terrorism and lower tax rates to prevent the financial market turmoil in the United States from spreading to Canada.

3） Event 3:

The Bank of Canada will cut rates again to stimulate the economy. And delayed plans to raise interest rates. The Canadian government will make policies to export to other countries to keep GDP stable.

4） Event 4:

The Canadian government actively negotiated with the Chinese government, hoping to continue to import Canadian goods. At the same time, the government lowered taxes to ensure the stable growth of GDP, not influenced by the United States. The Bank of Canada could cut rates again, and a trade war with the United States could drive the Fed to cut rates, so the Bank of Canada can only cut rates for the sake of the economy.

5） Event 5:

The Canadian government will raise interest rates to keep inflation stable. The Bank of Canada will also raise interest rates to keep the Canadian dollar stable, not to devalue, and to withdraw funds.

References

1. https://baike.baidu.com/item/加拿大/145973?fr=aladdin
2. https://zhidao.baidu.com/question/2209165948120280948.html
3. https://tradingeconomics.com/canada/exports
4. https://tradingeconomics.com/canada/imports
5. https://www.valutafx.com/CAD-USD-history.htm
6. https://www.canada.ca/en/immigration-refugees-citizenship/services/new-immigrants/learn-about-canada/governement.html
7. https://www.in2013dollars.com/Canada-inflation
8. https://www.statista.com/statistics/578362/unemployment-rate-canada/
9. https://www.statista.com/statistics/650845/gdp-growth-canada/
10. https://www.ceicdata.com/en/indicator/canada/external-debt--of-nominal-gdp
11. https://www.ceicdata.com/en/indicator/canada/bank-lending-rate
12. https://www.bing.com/search?q=+Causes+of+inflation+in+Canada&go=Search&qs=n&form=QBRE&sp=-1&pq=causes+of+inflation+in+canada&sc=1-29&sk=&cvid=73A3698C73634E3CBFC70F80FA733BED
13. https://www.quora.com/What-are-the-three-main-causes-of-unemployment-in-Canada
14. https://wenku.baidu.com/view/1f212336f342336c1eb91a37f111f18583d00c1f.html
15. https://en.wikipedia.org/wiki/Financial_crisis_of_2007–08
16. https://www.bing.com/search?q=Canada%27s+inflation+rate+2008&go=Search&qs=n&form=QBRE&sp=-1&pq=canada%27s+inflation+rate+2008&sc=3-28&sk=&cvid=4CD28CA414634D1584CABE1659910EF4
17. https://www.breitbart.com/economy/2019/12/06/canada-loses-most-jobs-since-crisis/
18. https://www.bing.com/search?q=Canada%27s+GDP+grow+rate+2008&go=Search&qs=n&form=QBRE&sp=-1&pq=canada%27s+gdp+grow+rate+2008&sc=1-27&sk=&cvid=2F478BE7F83E4A53BF985BB422638EE7
19. http://www.cnki.com.cn/Article/CJFDTotal-YNJR201106037.htm
20. https://en.wikipedia.org/wiki/September_11_attacks
21. https://www.military.com/daily-news/2019/10/06/unemployment-rate-post-9-11-veterans-rises-again.html
22. https://www.bing.com/search?q=2001+us+inflation+rate&go=Search&qs=n&form=QBRE&sp=-1&pq=2001+us+inflation+rate&sc=1-23&sk=&cvid=EC00FD847EDA4C9C852E63E31CE965E7
23. https://www.bing.com/search?q=+us+2001++GDP+growth+rate&go=Search&qs=n&form=QBRE&sp=-1&pq=us+2001+gdp+growth+rate&sc=1-23&sk=&cvid=7064EC3AE5654F048B472D073CFBC734
24. https://tradingeconomics.com/united-states/bank-lending-rate
25. https://www.thebalance.com/how-the-9-11-attacks-still-affect-the-economy-today-3305536
26. https://en.wikipedia.org/wiki/Brexit
27. https://www.theguardian.com/business/2018/mar/20/inflation-dips-to-27-as-impact-of-brexit-vote-starts-to-fade
28. https://www.ft.com/content/953671ba-b784-37f6-8f29-45402e846d50
29. https://www.theguardian.com/business/live/2017/oct/25/uk-gdp-britain-growth-slowdown-brexit-pound-ftse-business-live
30. https://money.cnn.com/2017/03/29/news/economy/brexit-article-50-cost-economy-debt/index.html
31. https://www.which.co.uk/news/2019/11/what-will-brexit-mean-for-interest-rates/
32. https://www.in2013dollars.com/CAD-inflation-rate-in-2018
33. https://knoema.com/atlas/Canada/Real-GDP-growth
34. https://www.bing.com/search?q=The+impact+of+brexit+on+the+Canadian+economy&go=Search&qs=n&form=QBRE&sp=-1&pq=the+impact+of+brexit+on+the+canadian+economy&sc=1-44&sk=&cvid=00999EB5DB8E4E4FA98F863975A103EA
35. https://en.wikipedia.org/wiki/China–United_States_trade_war
36. https://tradingeconomics.com/canada/inflation-cpi
37. https://www.bing.com/search?q=canada+unemploment+rate+2019&go=Search&qs=n&form=QBRE&sp=-1&pq=canada+unemploment+rate+2019&sc=4-28&sk=&cvid=54820ECCCC304570BAC3244CEB592A76
38. https://tradingeconomics.com/canada/gdp-growth
39. https://www.ceicdata.com/en/indicator/canada/external-debt
40. https://www.bing.com/search?q=canada+bank+lending+rate+2019&go=Search&qs=n&form=QBRE&sp=-1&pq=canada+bank+lending+rate+2019&sc=1-29&sk=&cvid=81EA1485D61346E7ACA4417B978E6BE0
41. http://business.sohu.com/20151217/n431586344.shtml
42. http://www.sohu.com/a/49071907_119601
43. https://www.statista.com/statistics/271247/inflation-rate-in-canada/
44. https://www.bing.com/search?q=canada+unemploment+rate+2015&go=Search&qs=n&form=QBRE&sp=-1&pq=canada+unemploment+rate+2015&sc=2-28&sk=&cvid=EAE193B84E3F45E080F0FA7C242ADD73
45. https://tradingeconomics.com/canada/gdp-growth
46. https://wenku.baidu.com/view/ea57baf179563c1ec4da71e2.html
47. https://wenku.baidu.com/view/4cb262bea0116c175f0e4899.html
48. http://blog.sina.com.cn/s/blog_5373b88f0102wiw9.html
49. https://www.sohu.com/a/337918198_164026