Negative Trade Deficit In Canada

Canada is one of the wealthiest nation in the world, it has a Gross Domestic Product (GDP) that was worth 1786.66 billion US dollars in 2014, which ranks 14th worldwide. The GDP value of Canada represents 2.88 percent of the world economy. GDP in Canada has continually increased year to year, with the exception of 2008 to about 2010. Canadas average GDP is 581.41 USD Billion from 1960 until 2014, reaching an all-time high of 1838.96 USD Billion in 2013 and a record low of 40.77 USD Billion in 1961. GDP per capita percent growth has been positive except for 1975, 1982, 1991, and 2009 were negative 0.09, 4.18, 3.44, 3.82 percent respectively. Canada had maintained a positive trade deficit until 2008 were it began to see a negative trade deficit, since 2008 it has fluctuated between positive and negative trade deficit. See figure 1
Canada is considered a social market economy, which is a combination of free market and state funded provisions for those unable to participate in the labor. In the “Index of Economic Freedom” of the Heritage Foundation, Canada is rated higher than most western European countries and slightly lower than the USA. Similar to other developed countries, the Canadian economy is dominated by the services sector.
Canada is the leader in mining for natural resources of potassium, nickel, …show more content…
The object of this expansionary fiscal policy by the Canadian government, is to shift the demand curve to intersect with the short run aggregate supply curve and with the long run aggregate demand curve. In this case, since Canada is in the midst of a recession the aggregate demand curve is to the left of the intercept of the long run aggregate demand curve. At present the equilibrium of output (y1) is lower than the full employment of output (yfe) the difference of yfe and y1 is the recessionary gap. This recessionary gap is what the Canadian government is attempting to