Edmonton's Economy

This article is about how Edmonton is changing the way they spend money. One thing they’re doing is giving people a tax break and making smokers pay more for their cigarettes, which will be the highest any Canadian has to pay for cigarettes. The government is increasing spending on things like schools, roads and hospitals because they hope it may make up for the increase in inflation. A lot of the money is going to create new infrastructure (18.3 billion), new highways (4.6 billion), which will put money back into the economy because it will create jobs. Healthcare is also getting 12.2 billion to help Edmonton’s healthcare situation. The spending is caused by an increase in population and economic growth in Edmonton. 200 million is being spent on the museum, billions of dollars are being given to municipalities and all of this will have a multiplier effect on the economy. A multiplier effect means that by either putting money into the economy or taking money out of the economy, will cause other things to be effected. Also, Edmonton’s GDP has grown by 6.9%, but because of inflation, the RGDP has only grown by 3%.

The tax break will allow people to have more disposable income, which means consumption will increase, which in turn will help the economy increase. One problem is that the government expects the economy to slow down, which may cause people to expect prices to change and may cause people to spend less on the economy. 100,000 new people have entered Edmonton’s population, which will cause consumption to go up. The tax break will allow more people to buy consumer goods like computers, which means the owner will spend that money on other consumer goods and this cycle will keep happening. This cycle is called the expenditure multiplier because someone spending money on a consumer good will in turn cause someone else to spend money on a consumer good. The population of Edmonton is 2006 is about 1,000,000 people, if each person gets a tax break of $50, $50 million may be spent on consumer goods. Say 80% of the 50 dollars is spent by each person, the expenditure multiplier shows, 50,000,000 x 1/1-0.8 = 50,000,000 x 5 = 250,000,000 change in GDP. The tax multiplier may also be applied because $50,000,000 less will be revenue generated by the government. If the MPC is 0.8, the tax multiplier will be –(-50,000,000 x 0.8/1-0.8 = -(50,000,000 x 4 = $200,000,000 change in GDP.

I believe that Edmonton’s economy will slow down because I believe the oil industry will receive fewer revenues in the coming years. I think the GDP won’t grow 6.9% again because the economy will slow down. The government is doing the right thing by not spending too much to make sure they are never in the situation they were in before. The situation is where things like spending on healthcare and infrastructure in neglected because of low economic activity. I believe they are trying to make sure that never happens again.

Unemployment Rate Increases

This article is about Canada’s unemployment rate going up, mainly because of Eastern Canada. Even though Western Canada, mainly Alberta has had unemployment go down, Eastern Canada has had unemployment go up. The article states that a reason for the unemployment rate going up is more people entered the job market. But the unemployment rate going up isn't going to cause a huge different in the big picture according to economists. Just a few months earlier, 100,000 jobs were created and that lead people to worry borrowing rates were going to increase because the Bank of Canada wanted to make sure inflation doesn't go up. But because the unemployment rate went back up, it is a possibility that interest rates will go down even more. The reasons for this increase in unemployment are the Alberta boom slowed down but the main reason is many manufacturing jobs are disappearing. One main cause of manufacturing jobs disappearing is the Canadian dollar because companies don't want to pay the cost of the high Canadian dollar. Also, wages went up slightly but it won’t have a big affect on the economy.

Their in frictional unemployment in Canada because a lot more people entered the job market. The cause of this might have to do with seasonal employment because many youths only work in the summer and more construction, tourism, recreation and agriculture jobs are available during the summer months. Inflation has also affected the manufacturing sector because inflation partly causes the Canadian dollar to go up. Because of the Canadian dollar going up, companies are reluctant to do business in Canada because of the high Canadian dollar. The main cause for concern about inflation going up were the 100,000 jobs that were created. These 100,000 new jobs would causes wages to go up, which is a key factor in cost-push inflation. Their have been concerns that the bank of Canada would increase the borrowing costs, so they could control the inflation rate but this never happened.

In my opinion, inflation rates will not raise significantly in the next decade. I think wages will not go up significantly because the Canadian dollar is still high but I expect the dollar to lower in the next few years, which may allow wages to slightly increase. I also expect the unemployment rate to stay about the same if not slightly lower in the next decade. Once the Canadian dollar goes back down, jobs in the manufacturing sector should pick up again and to counter balance that, I think Alberta's oil boom will slow down or become stagnant very soon. I think the next decade will have little change in regards to inflation and unemployment rates.

http://www.cbc.ca/cp/business/060804/b080428.html

Increase in Unemployment Rate

This article is about Canada’s unemployment rate going up, mainly because of Eastern Canada. Even though Western Canada, mainly Alberta has had unemployment go down, Eastern Canada has had unemployment go up. The article states that a reason for the unemployment rate going up is more people entered the job market. But the unemployment rate going up isn't going to cause a huge different in the big picture according to economists. Just a few months earlier, 100,000 jobs were created and that lead people to worry borrowing rates were going to increase because the Bank of Canada wanted to make sure inflation doesn't go up. But because the unemployment rate went back up, it is a possibility that interest rates will go down even more. The reasons for this increase in unemployment are the Alberta boom slowed down but the main reason is many manufacturing jobs are disappearing. One main cause of manufacturing jobs disappearing is the Canadian dollar because companies don't want to pay the cost of the high Canadian dollar. Also, wages went up slightly but it won’t have a big affect on the economy.

Their in frictional unemployment in Canada because a lot more people entered the job market. The cause of this might have to do with seasonal employment because many youths only work in the summer and more construction, tourism, recreation and agriculture jobs are available during the summer months. Inflation has also affected the manufacturing sector because inflation partly causes the Canadian dollar to go up. Because of the Canadian dollar going up, companies are reluctant to do business in Canada because of the high Canadian dollar. The main cause for concern about inflation going up were the 100,000 jobs that were created. These 100,000 new jobs would causes wages to go up, which is a key factor in cost-push inflation. Their have been concerns that the bank of Canada would increase the borrowing costs, so they could control the inflation rate but this never happened.

In my opinion, inflation rates will not raise significantly in the next decade. I think wages will not go up significantly because the Canadian dollar is still high but I expect the dollar to lower in the next few years, which may allow wages to slightly increase. I also expect the unemployment rate to stay about the same if not slightly lower in the next decade. Once the Canadian dollar goes back down, jobs in the manufacturing sector should pick up again and to counter balance that, I think Alberta's oil boom will slow down or become stagnant very soon. I think the next decade will have little change in regards to inflation and unemployment rates.

http://www.cbc.ca/cp/business/060804/b080428.html

Taxes And The National Debt

This article talks about how the Conservatives in Canada are planning to lower taxes and at the same time, lowering the national debt. The plan is to pay off the net debt in 15 years and the savings from the interest would be used as tax cuts. This plan drew criticism from the Liberals and NDP because they say the net debt is calculated differently and is a lot smaller then the federal debt. The Conservatives also are saying the government surplus will increase and the money will be used to make Canada's debt smaller. The Conservatives say the tax cut will give people a reason to work harder and it will be a reason for skilled workers to stay and to come to Canada. The NDP have a problem with the Conservatives plan because they say they are neglecting the daily lives of Canadians by focusing on the national debt. While the Conservatives say they will be increasing the amount of money put into infrastructure and will be giving more money to universities and colleges. Net debt is calculated by taking Canada's debt and subtracting Canada's assets from it, the net total will be the net debt.
The Conservatives are planning to reduce the net debt, which in turn will lower interest payments, which in turn will be used to lower tax percentages. A big source of this net debt are governments borrowing money from citizens and companies in and outside the country. They do this because most citizens don't know about it and it looks better then increasing the tax percentages. They say the interest payments that they'll no longer have to pay will lead to tax cuts, but with Canada using a progressive tax, will the tax cut benefit the rich or the poor. Lowering tax percentages in a progressive tax system for low income families will not cost the government a lot of money, which means many businesses and high-income families may receive the benefits of the tax cuts. This plan may work if Canada's economy is booming but if Canada's economy starts slumping, will the government keep borrowing and increasing the net debt or will it increase tax revenues.
This topic is very important to the youth of Canada because once teenagers like me enter the working world, will we be receiving these tax cuts? I am willing to pay higher taxes as long as the government reduces the debt, which in my opinion will benefit us in the future. I predict the national debt will slowly be reduced, but factors such as the slumping American economy will slow down the national debt being reduced.

http://www.cbc.ca/cp/business/061123/b112357A.html

Healthcare System Leads to Health Benefit Cuts

This article is about General Motors (GM) wanting their employees to give back some of their health benefits, which will make the employee pay more for healthcare. But the key point is GM only wants employees to give their benefits back in the US and not in Canada. The reason is because the United States healthcare system is controlled by private companies with little to no involvement by the United States government. Canada uses a system that is controlled by the government which lowers healthcare costs for companies like GM. In the United States, $6,800 is the average amount that is spent per employee on healthcare benefits. That’s the reason companies like GM are asking for employees to give back some of their benefits and initiating research into the Canadian system. One reason the United States hasn't gone to a Canadian style system is because 15.1% of their GDP is spent on healthcare and getting rid of that would upset companies. Since US citizens that don't have healthcare benefits have to spend a lot of money on insurance, distribution of income comes into effect. Distribution of income shows how much people make which helps to determine how many people are living in poverty.

Since healthcare is not an unmet public good in the United States, it is hard to determine if the government should play a role in healthcare. But an argument for government involvement is the effect of distribution of income. Distribution of income allows certain people to be able to pay for private healthcare while some cannot. Companies like GM are cutting back their healthcare benefits because it costs too much. But most employees who work in plants and make cars aren't high earners, which affects them because they have to pay a high amount of their money on healthcare. Many people are then forced to either pay for insurance and possible live in poverty or take a chance and not buy insurance. In that case, the government should be involved in a market economy because the distribution of income leaves many people not being able to afford insurance. If companies are going to cut back on healthcare benefits, the government has no choice but to enter the market since distribution of income leaves some people in poverty.

In my opinion, a two tiered system where high earners with benefits can choose private healthcare and where people living in poverty can get service given to them by the government is the best option. Their will be less strain on the public system since they will have less customers and tax payers money can be spent on other things. The only problem is the private section will most likely pay more money to doctors and nurses which will put a strain on public workers. In the future, I think the Canadian healthcare system will allow certain private companies to enter the market but they will be regulated, which already happened to a private clinic in BC. But I don’t see this happening in the United States which will lead more companies like GM to lower health benefits.
http://www.inthesetimes.com/site/main/article/2081/

Opportunity and Demand Costs of a College Education

This article talks about why colleges and universities don’t give you as many opportunities as you think. The article states that the cost of attending colleges or universities is very high, which can lead to problems down the road. There are other reasons why college graduates earn more, such as family connections and being more motivated. He believes that the years you would be going to university are your most youthful years and you can do better things with them. Another main point is that just because you’re good at school doesn’t mean you’ll be good at life. Another option is that you can take a year of school, start your own business or take an apprenticeship.
This article relates to the direct and opportunity costs of Chapter 1. The article shows many reasons why the opportunity costs can outweigh the direct costs. The direct costs are such things as the tuition, shelter and food. The opportunity costs are 4-6 years of life and the money you could off made working. This article tries to show people why the opportunity costs can’t be ignored and that not attending college might be the best way to go. The author also attempts to show why direct costs such as tuition can lead to debt in the future, which is something people might not be able to get out of.
I think that people should attend college. In the Canadian job market a degree can go a long way in helping you find a job. Without a college degree you aren’t accessible to high paying jobs such as accountants, doctors and lawyers. Even if you take an apprenticeship, you won’t have the opportunity to make a lot of money. Their will most likely be a limit on how much you can make, unless you open your own business. The problem with opening your own business is that many small businesses fail. I believe that if you miss the 4 years after graduating secondary school because of post-secondary school, you will regret it. That’s why I think people should take 1-2 years off after high school and enjoy their life. Then, you can return to school and finish your education.
http://www.princetonreview.com/college/research/articles/find/shouldyougo.asp

Supply and Demand of Hybrid Vehicles

This article talks about how the demand for hybrid vehicles is going up. Gas prices are going up, which is leading to demand for hybrid vehicles going up. Demand is so high for hybrid vehicles, that there are waiting lists for them. Consumers are even paying extra money to get higher on the waiting list. But there is a problem, there isn’t a big enough supply of hybrid vehicles. The wait time for the Lexus RX 400h is 1 year, Lexus even had to stop advertising so they wouldn’t get so many orders. There is a reason for there being a low supply for hybrids, the reason is that it costs more to develop. Many manufacturers believe the market isn’t strong enough to develop more and more hybrids. Hybrid vehicles use 2 engines, a gas powered and electric powered one. Hybrid vehicles are supposed to be two times more efficient than your conventional car. As the years and years go by, more and more hybrids will be made, which should in turn, result in them costing less to make.
This relates to the section on supply and demand in Chapter 2. The demand is increasing because the tastes and preferences for vehicles have changed dramatically. The high oil prices have lead to people changing their preference to hybrid and not gas powered vehicles. The supply is changing because of technological change, which is making the production of hybrid vehicles cheaper, which is raising the supply of them. But hybrid vehicles are a bit different than most products. At this time there is a high demand for hybrid vehicles, but the supply isn’t dramatically increasing. Even if hybrid vehicles are charged at a higher price, the demand will stay high. But since there is a small supply, the demand for them goes up.
I think that hybrid vehicles are here to stay. Technological change will help decrease the price, which will increase supply. Once supply goes up, the price will go down, which in turn will lead to demand going even higher. With many scientists talking about how global warming is affecting us, people will start caring about the environment. Also, the gas mileage is greater, which means people will spend less money on gas, which is another incentive on buying hybrid vehicles in the future.
http://www.detnews.com/2005/autosinsider/0506/01/A01-197580.htm