Identify the type of equilibrium

Assignment Help Macroeconomics

Reference no: EM133469413

Assignment:

The Bank of Canada raises the target for the overnight rate by a quarter of a percentage point to 4%.

OTTAWA - The Bank of Canada announced today that it is raising the target for the overnight rate by a quarter of a percentage point to 4%. It also increases the limits of the operating range for this rate by a quarter of a point [...].

The global economy is growing at a healthy pace, showing slightly more momentum than expected. This boom and the accompanying rise in many commodity prices, combined with strong domestic demand in Canada, have enabled the country's economy to record a robust rate of expansion, in line with the outlook set out by the Bank in the January Monetary Policy Report Update. At the same time, global competition and the past appreciation of the Canadian dollar continue to pose challenges for several sectors. All things considered, the Bank believes that the Canadian economy is operating at a level [...] equal to its productive capacity. High energy prices kept the rate of increase in the headline CPI in Canada slightly above the Bank's target. However, core inflation remained below 2% due to persistent downward pressure from the prices of imported consumer goods. Under these circumstances, the Bank has decided to increase the target for the overnight rate. [...]

In light of this outlook, the Bank estimates that it may need to raise the policy rate somewhat further in order to maintain the balance between aggregate supply and demand and to keep inflation at the target rate over the medium term [. ..].

Issue 1:

Identify the type of equilibrium (full employment, underemployment or overemployment) that characterized the Canadian economy before April 2006. Explain

Issue 2:

Identify the reasons cited in the press release, and only those reasons, that explain how the Canadian economy changed from the situation that prevailed before April 2006 to that of April 2006.

Reference no: EM133469413

Questions Cloud

What is money : Given the current situation in 2022, assess and evaluate the possibilities of whether interest rates will go up or down in 2023.

Relationship between price-supply and demand : Most goods respond to the relationship between price, supply, and demand. What happens when price controls are put in place such as for gasoline in the 1970s?

Calculate gross domestic product : Summarize the consumer expenditures portion of the GDP calculation andprovide 2 explains of purchases you've recently bought that would fall under thiscategory.

Who keeps track of the unemployment rate and inflation rate : Who keeps track of the unemployment rate and the inflation rate? When do they report on them? How do they calculate both rates?

Identify the type of equilibrium : Identify the type of equilibrium (full employment, underemployment or overemployment) that characterized the Canadian economy before April 2006. Explain?

What does the term recession mean : What does the term "Inflation" When does a country go into a recession - explain the factors and how they can be identified?

Identify marginal costs of a typical ev battery manufacturer : Based on the cost function above, identify the fixed, variable, average, and marginal costs of a typical EV battery manufacturer.

Construct an ad-as model for the australian economy : Aggregate supply curve: The AS curve will shift to the right due to the recovery of output and supply-side adjustments.

How can we stimulate gdp growth in our country : How can we stimulate GDP growth in our country? Is it possible to increase our development and maintain our leading positions in the world?

User Account

All Pages