Question

FOR THE CURRENT YEAR (2020): Write recommendations for government fiscal policy (specific spending and taxation changes) that you feel would be best for the Canadian economy using your understanding of the economics concepts taught in the course. Use the following guidelines as you write your recommendations: Give consideration to the impact your decisions would have on each of the economic indicators. Your discussion might consider some of the following topics: government debt and the budget surplus or deficit; the impact of these recommendations on government services; how Canadians will benefit from the recommended policies in the short term and in the long term; the multiplier effect; any potential problems with your recommendations. These are just some suggestions. Your argument should discuss several ways that your ideas will impact the economy. The recommendations you discuss could include several of these areas but you can use any relevant course concepts to justify your recommendations.

Answer 1

In the current situation of global pandemic situation. Their is a negative shock to the economy in the form of corona pandemic, it has hit the aggregate demand of the Canada. In the short run the fiscal policy should target to prevent the aggregate demand from falling to the worst level. So to tackle this government should come up with cash distribution so that the money given should recirculate within the economy as well as it stimulate the aggregate demands. the moratorium offered is also a great step to reduce the burden of debt on consumer in short term so that the disposable income increases.

In the long term the government should increase the spending so that the unemployment get reduced and business confidence increases. the government should reduce the tax on the consumers so that they have high disposable income with them and they go out and spend this will boost the aggregate demand in the long run.

Explanation:

In the current situation of global pandemic situation. Their is a negative shock to the economy in the form of corona pandemic, it has hit the aggregate demand of the Canada. In the short run the fiscal policy should target to prevent the aggregate demand from falling to the worst level. So to tackle this government should come up with cash distribution so that the money given should recirculate within the economy as well as it stimulate the aggregate demands. the moratorium offered is also a great step to reduce the burden of debt on consumer in short term so that the disposable income increases.

In the long term the government should increase the spending so that the unemployment get reduced and business confidence increases. the government should reduce the tax on the consumers so that they have high disposable income with them and they go out and spend this will boost the aggregate demand in the long run.