Fiscal policies

Good morning Ms. Teetart and fellow classmates. Last week in economics we had discussed a good amount of topics, but for this blog today I would like to focus on fiscal policies and how they are used in an economy. So to refresh our minds the two policies that were discussed last week were contractionary fiscal policy and expansionary fiscal policy.

Fiscal policies can be defined as a government action to influence an economy through the use of taxation and spending. These types of policies are used when the people who make policies believe that the economy needs outside help to reach a desired point. Typically the government’s main goal is to maintain steady prices, an employment level, and a growing economy. And if they see that any of these areas aren't doing so well some type pf policy will be put into action. Fiscal policies can be used to either help stimulate an economy or to slow down an economy that is growing at a very rapid pace.

When an economy is in a recession, expansionary fiscal policy is in order. Typically this type of fiscal policy results in increased government spending and/or lower taxes. A recession results in a recessionary gap – meaning that aggregate demand is at a level lower than it would be in a full employment situation. In order to close this gap, a government will increase their spending which will increase the aggregate demand curve since government spending creates demand for goods and services. At the same time, the government may choose to cut taxes, which will affect the aggregate demand curve by allowing consumers to have more money to spend. The actions of this expansionary fiscal policy would result in a shift of the aggregate demand curve to the right, which would result closing the recessionary gap and helping an economy grow.

On the other hand Contractionary fiscal policy is essentially the opposite of expansionary fiscal policy. When an economy is in a state where growth is at a rate that is getting out of control, contractionary fiscal policy can be used to help bring it to a more sustainable level. If an economy is growing too fast , an inflationary gap will form. In order to eliminate this inflationary gap a government may reduce government spending and increase taxes. A decrease in spending by the government will directly decrease aggregate demand curve by reducing government demand for goods and services. Increases in tax levels will also slow growth, as consumers will have less money to consume , thereby reducing the aggregate demand curve. 

Overall, fiscal policy is a type of economical intervention where the government injects its policies into an economy in order to either expand the economy’s growth or to contract it. By changing the levels of spending and taxation, a government can directly or indirectly affect the aggregate demand, which is the total amount of goods and services in an economy.

Video 

https://www.youtube.com/watch?v=oGQBvDt3BqI  

Work Cited

Expansionary Fiscal Policy-

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=expansionary+fiscal+policy

  

Contractionary Fiscal Policy-

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&sqi=2&ved=0CCQQFjAC&url=http%3A%2F%2Fwww.amosweb.com%2Fcgi-bin%2Fawb_nav.pl%3Fs%3Dwpd%26c%3Ddsp%26k%3Dcontractionary%2Bfiscal%2Bpolicy&ei=4qw9VeLIBoaWNv-egcgI&usg=AFQjCNGHaIeDNXYBRBxXUpMB2wV-u-rqwg&sig2=pgbSelyp2czkSdYMobXZ2A

Video about the two policies-

https://www.youtube.com/watch?v=oGQBvDt3BqI 

What Is Fiscal Policy?

Good Morning Ms. Teetaert and fellow classmates, last week we briefly learned about the topic of fiscal policy and as a recap I will be further discussing what fiscal policy is. Fiscal policy is when the government adjusts its spending and taxes rates to manage a nation’s economy. Fiscal policy consists of making decisions to balance spending levels and taxes, these decisions are the most important decisions the federal government has to make since increasing or decreasing one or the other can greatly affect the economy.

This affects the economy in the sense that if the government needs money to fix the roads they would have to increase the taxes to obtain the money, although inceasing taxes lowers economic activity since with higher taxes, people tend to spend less. Also with increasing tax rates, it can decrease disposable income since it takes money out of households. The government also may need to increase taxes when there is inflation since increasing taxes can lower demand.

Now if the government decides to incease their spending, it increases economic activity since people would benefit from these spendings and the tax rates won’t be as high which means that consumers will have more money to spend and that more money will be left in households. Although, with a decrease in spending means a decrease in taxes which usually leads to high demand which lead to high production levels since people are consuming so much.

How does this relate to the real world? Fiscal policy relates to the real world in the sense that the government can either take money out of your pockets or leave it in there which may lead you to thinking you have more money to spend which either affects us all or some. The decisions the federal government makes on either increasing taxation or decreasing it will affect us and the health of the economy.

Work cited

"What Is Fiscal Policy?" Investopedia. N.p., 16 May 2004. Web. 19 Apr. 2015.

"Fiscal Policy." The Canadian Encyclopedia. N.p., n.d. Web. 19 Apr. 2015.

Infoplease. Infoplease, n.d. Web. 19 Apr. 2015. <http://www.infoplease.com/cig/economics/government-unique-situation.html>

Labour Force Trends

As modern day kids, we hear a lot of stories about the agricultural economy and how it was in demand. Families owned farms and maintained crops, the numbers have decreased and more people are going into the very popular industrial economy. 
The changing labour force that includes the women and college graduates very much affects the labour force. As the world becomes more and more advanced, women advance just as much. They have become more independent and some women are even the breadwinners of the family. The number of women in the work force has increased from about 38% to about 58%. 
College graduates contribute to the learning e

ffect, which is the theory that education increases productivity and results in higher wages. And the screening effect theory suggests that the effect is the theory that education increases. 
In regards to earnings, it is known that earning for college graduates have increases while earning for workers without a college degree have decreased. This is mostly because someone who is capable of receiving a degree is seen as more independent, intelligent, and trustworthy. Also, if you are more educated then you will likely be able to do more work in the field you have studied. If you do more work, you will get a higher salary because you are seen as qualified. 
When talking about supply and demand in the labour market, three definitions should come to mind. The labour demand, labour supply, and the equilibrium wage. The labour demand definition means that the higher the wage rate the smaller the quantity of labour demanded by firms and the government. Labour supply means that as wages increase, the quantity of labour supplies also increases. And finally the equilibrium wage is what does not produce an excess supply of workers nor an excess demand for workers in the labour market. It is found at the intersection of the demand curve and supply curve. 
The final thing being talked about today is wage and skill levels. The amount of skills vary from job to job. A doctor requires a lot more schooling to attain the skills rather than a waitress who just requires a day of orientation. There are four categories: Unskilled labour, semi skilled labour, skilled labour and professional labour. Unskilled labour refers to a job that requires no specialized skills, education, or training (waitress). Semi skilled labour refers to the jobs that need minimal specialized skills and education (fork lift operator). Skilled labour is a job that requires specialized skills and training (plumber), and professional labour is a job that demands advanced skills and education (lawyer). 

Labour Force and Unemployment

Good morning Ms. Teetaert and fellow classmates, the week before our spring break we discussed the topic of the labour force and it's relation to unemployment. We learned about the labour force survey and things such as which categories people fall into as they are employed and unemployed. The labour force survey provides a monthly measure of the number of people who are unemployed in Canada and has a formula to go along with it. The survey excludes residents of the three territories, people living on Indian reserves, inmates of institutions and full time members of the armed forces. It includes each member of a selected household who is 16 years and older during a particular reference week. The formula that goes along with the survey calculates the participation rate. The participation rate is the percentage of the population that is employed or is actively seeking employment. It is calculated as such; Participation Rate = Labour Force
                                                                Population (16+)
Factors that influence participation rate are general economic conditions, an aging population and early retirements, subsidized daycare, changes in family size and income and increased educational opportunities. For people not in the labour force there are different categories they can be placed into, two of these are discouraged workers and out of the labour force. To be a discouraged worker you would have to be a person who would like to have a job but have not made an effort to find one . To be out of the labour force you would have to be a person who has worked previously but is not looking for a job currently. The topic closely related to the labour force is unemployment and the formula for this is; Unemployment Rate = Unemployed Workers x100%
                                                                    Total Labour Force      

Upon further research it's evident that the concern of unemployment in the labour force is very alive in recent years. As the ages of employed people increase the gap between genders also increase, it shows that more men are employed than women. Nearly five years after the end of the 2008-2009 recession, Canada's unemployment rate has remained fixed at 7.2% (December 2013), a level first reached mid-2011. But rather than a static group of individuals, large numbers of workers flow in and out of unemployment each month. Recessions affect these flows in various ways, for example fewer people quit their job or decide to enter the labour market when the job market looks dismal. Following a recession, there is usually an increase in the number of workers that are unemployed for extended periods of time.



https://www.youtube.com/watch?v=GHZUkomO7lI

Work Cited
Yussuff, Hassan. "Underemployment is Canada's Real Labour Market Challenge." Canadian Labour Congress. 7 Apr 2015. http://www.canadianlabour.ca/news-room/publications/underemployment-canadas-real-labour-market-challenge