http://www.vancouversun.com/business/Canada+economy+expand+2010/2670796/story.html
Canada's economy to expand by 3.1% in 2010: RBC
|summary|
According to an Economics report released, signs are pointing that Canada’s economy is growing another 3.1% in 2010. Unemployment rates are expected to average 8.4% in 2010 before falling to 7.7% in 2011 while consumer spending is expected to expand by 2.8% in 2010 and 2011. Business investment is set to rise by more than 7%. The report states that “this should result in Canada’s GDP expanding by an even greater 3.9% in 2011”. The economic growth will be boosted by gains in Newfoundland and Labrador with 4.1%, Saskatchewan with 3.6%, B.C with 3.4%, and Ontario with 3.3%. Alberta will rise only 2.5% this year but strengthen to 4.4% in 2011. Lastly, the unexpected strong growth in the fourth quarter of 2009 reported has prompted traders to conclude that the Bank of Canada will soon raise interest rates to keep the economy from overheating, sending Canada’s dollar surging against the U.S. currency.
|connection|
This article connects to the economic indicators in chapter five. The growth in Canada’s economy relates to the concept of GDP, in the economic indicators. Gross domestic product (GDP) represents the value of all final goods and services produced in a country in a given year. The reason for the growth in GDP can be seen as an inflation in the economy because there is a lower interest rate therefore consumers are spending more. This means that there are more money circulating in the economy bringing it up which is known as the circular flow of money. An increase in the general level of retail prices is a result by definition of inflation.
|reflection|
With the Canadian economy on the rise again, the expanding GDP in Canada shows that people are spending more money which can be a positive thing. It means that the economy is having a good balance of the circular flow of money. Having a low interest rate makes consumers want to spend more therefore increases the GDP of Canada. However, as a result of having low interest rates, inflation happens increasing the general level of retail prices. To balance this out, Canada will increase interest rates as a solution to inflation to the Canadian economy.
