Essays /

Government Can Do Reduce Gas Price Essay

Essay preview

A carefully considered economic policy of a government may in fact shield, to a certain extent, the Canadian economy from the shocks of increasing world prices of oil and resources. There are a number of policies that could be applied to achieve a stable domestic economy. Some of these points are discussed below.

1. Government Fiscal and Monetary Policies.

Governments in market economies play critical roles in providing the economic conditions in which the marketplace of private enterprise can function most effectively.

One such role is to provide a widely accepted, stable currency that eliminates the need for cumbersome and inefficient systems of barter, and to maintain the value of that currency through policies that limit inflation (an increase in the overall level of prices of goods and services).

Historically, market economies have been periodically afflicted by periods of rapidly rising price levels, at other times with high levels of unemployment, or occasionally by periods with both high rates of inflation and unemployment such as the German hyperinflation of the 1920s and the worldwide unemployment of the 1930s known simply as the Great Depression.

Only in this century have economists and government policymakers developed a standard set of stabilization policies - known as fiscal and monetary policies - that Canadian national governments can use to try to moderate (or ideally to eliminate) such episodes.

Fiscal policies employ government spending and tax programs to stimulate the national economy or to slow it down in times of high inflation (i.e. price rises) and low unemployment that Canada is experiencing at present.

To slow down an overheated Canadian economy - one where virtually everyone is working who wants a job, but where spending and prices are rising rapidly - the government has several options to keep prices from spiralling too high.

- It can cut its own spending;

- Raise taxes; or

- both, in order to lower aggregate spending and production levels.

Monetary policy invol...

Read more


1 11.5 1920s 1930s 1970s 1983 1989 1990s 1995 2 2004b 3 4 5 6.6 60 7.4 9.6 abl accept accord achiev acknowledg actu addit adjust advantag afflict aggreg ahead also altern although among appli approach argument asian attempt australia automat avail award barter base basi basic becom benefit bottleneck budget budgetari busi call canada canadian capabl care case case-by-cas caus centralis centuri certain challeng chang cheapli china choic come commit commod communic competit condit consensus conserv consid consider consist consum content continu contract contribut cool cooper cope cost could counter countri credit crisi critic cumbersom currenc current cut deal debt decis declin decreas defenc demand democrat depend depress design develop difficult dilemma direct discuss disput dissent distribut diversif divert dividend domest econom economi economist effect effici eg element elimin embargo employ encourag end energi engag engin ensur enterpris entir environ episod equit escap especi essenti even everyon exampl exist expect expenditur expens experi experienc export extent face fact fair fall feder fell fight financ financi find firm fiscal flexibl forc fortun forward free free-market function fund futur gain gas general generat german global go good govern great greater grow growth health help high higher histor household howev huge hyperinfl i.e ideal implement import incent includ incom increas india induc industri ineffici inflat influenc interest intern invest involv issu job junctur june keep key kind know known labor lead learn least less level like limit live long long-stand long-term low lower lowest made maintain major make maker manag mani manner manufactur mark market marketplac may mean meet minimum moder monetari money monopoli month must narrow nation need never new non non-econom number occasion occup occur oecd offer oil oil-export oil-produc one open oper opportun option order output overal overh paid panacea part particip past peopl perform period perman pick play point polici policymak polit posit possibl power pragmat present pressur price privat problem produc product program programm promot protect provid public purchas put quick rais rang rapid rate rather reason recogn reduc reduct reflect regular reinforc relat remov repay resourc respons restrict result revenu rippl rise risk role safeguard save scarc schedul secur self self-suffici servic set sever shape shield shipbuild shock side simpli simultan situat skill slow slowdown slowli so-cal social solv sound sourc specifi spend spiral spread stabil stabl stand standard stark stimul strategi structur studi success sudden suffici suitabl suppli supply-sid surplus surviv suscept sustain system taiwan take task tax tend term theori therebi though time today total trade translat transport tri trigger type unemploy union use v valu virtual wage want whether wide wish work worker world worldwid would year