Macroeconomics Assignment: Canadian Economy & Monetary System

This assignment examines the impact of declining world energy prices on the Canadian economy, highlighting the effects on consumer spending, investment, and employment. It also explores the role of banks in the monetary system, focusing on money creation through loans and the influence of interest rates. The analysis considers the interplay of supply and demand, and the broader implications for economic variables. The report further delves into macroeconomic concepts, including aggregate demand, aggregate supply, inflation, and unemployment, providing a comprehensive overview of the Canadian economy and monetary system.

Macroeconomics
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Economics
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Question 2
In the short-term decline in the world energy prices would lead to the influence on the
economy of Canadian. It has been found that Canada deals in the energy which might affect
their operations. The positive effect of the decrease in the energy price leads to the impact on
the energy-importing nations that will probable added than balance of adverse effects on
trading that leads to impact on global growth. The decline in the prices will leads to issue in
Canada as there will greater consumer spending in terms of inferior energy prices, less
expenditure due to high price on products that are imported. It also affects the investment and
employment of the country for the short duration of the time. Thus, this means it will create
the impact on the supply and demand of product which is explained in graph below.
Question 3
The money is majorly shaped by the banks in form of deposits of bank along with this the
banks can also create the new money for the loans. Money creation is mentions to as control
of banks to contract request credits through procedure of advances, investments and loans. In
the fraction reserve system of banking, the commercial banks permitted to form the money by
permitting the different claims to assets on deposit. It has been found that the banks are
legally essential to keep a particular amount of deposit to which they claims as the liquid
cash. Thus, this shows the role of banks in creation of money within the country. The bank
charge the rate of interest from the customer to whom they allow loan amount which affects
the quantity which is presented below: -

Economics
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