Question

Suppose there is huge surge in liquefied natural gas investment in British Columbia. Discuss and explain the impact on labour supply and demand in BC and the rest of Canada in the short-run and long-run. Discuss the impact on wages and employment in BC and the rest of Canada.

Answer 1

Investment are always good for the economy of a country. Investment helps business organisations to grow and increase their production. Increase in production increases GDP of the country and in return there is a bosst in the economic growth.

In the given case, if there is huge surge in liquefied natural gas investment in British Columbia it will develop the industry and will increase the production. Increase in investment will motivate businesses to expand their business activities and increase production. For this, they will need labors and labor supply on the natural gas industry will increase. On the other hand, investment is an element of aggregate demand and when investment in natural gas industry will increase aggregate demand will also increaseincrease in BC and rest of the Canada.

In shirt run it will increase labor suuply and demand of natural gas but if investment keep pouring into the country then in Long runs also, same situation will take place and GDP of the country will increase.

As we have discussion above that increase in investment will increase the supply of labor. When supply of labor will increase wage rate will also increase because cost of production will be less and more capital is available for the production.

When labor supply is increased this means that more and more labor are being hired, this will reduce unemployment rates and increase Employement ratesrates on BC and rest of the Canada.

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