Long answer Question:

a. Using recent data attached below, explain the Canadian macroeconomic situation in terms of the 3 macroeconomic goals (Full employment, price stability, economic growth)

b. Explain the Phillips curve in reference to the Canadian economy for the most recent indicators for 2020-2021 period. Is this theory applicable? Explain.

DATA:

Macroeconomic Goals 1Q21 / Apr.2021) 13.00 UN % 12.00 11.00 10,00 Target for 9.00 UN= 6-7% 8.00 7.00 6.00 5.00 Target for 4.00 Inflation= 2.0% Inflation % 3.00 2.00 1.00 0.00 -1.00 -2.01090 3000 1001 3001 100 3002 1003 300 1004 3004 1005 3005 1006 Q06 1007 3007 100 3008 300 010 1011 1012 3012 1013 3013 1014 3014 1015 301 101 Q16 1017 3017 1018 218 1019 Q19 102 1020 10 -3.00 -4.00 GDP % -5.00 -6.00 2009 Target for Growth= OCDE (>0%) -7.00 Financial -8.00 Crisis -9.00 -10.00 -11.00 -12.00 -13.00 -14.00 2020-21 Covid-19 -> GDP Growth (Rate %) (2012=100) Inflation Rate (%) (2002=100) Unemployment rate (%) CrisisCanada: Macroeconomic Indicators Macroeconomic Indicator Old Period New Period Economic Growth GDP Nominal (x1000) 5 2,270,420 1020 2,414,348 1021 GDP Real (x1000) 2012=100 $ 2,071,033 1Q20 $ 2,077,771 1Q21 GDP Index (implicit) 2012=100 108.70 1020 114.50 1021 GDP Growth (Rate % Calculated) -0.45% 1Q20 0.33% 1Q21 Output Gap (% of GDP) -2.80% Q120 -3.4% 1Q21 Canada (Real GDP forecast/OECD) 1.4% 0 -6.8% 2021 OECD (Real GDP forecast) 1.6% -5.3% 2020 Population (million people) 37.324 Dec. 19 38.049 Dec.2020 GDP Per Capita 55,48 04 / 2019 54,60 Dec.2020 GDP Per Capita (annual % change) 04 / 2019 -1.58% Dec.2020 Inflation CPI Index (index) 2002=100 135.70 Apr.20 140.30 Apr.21 Inflation Rate (%) 2002=100 -0.20% Apr.20 3.4% Apr.21 Bank of CanadaTarget for Inflation 2.0% , +/- 1.0% (Max. 3.0% / Min. 1.0%) Unemployment population +15yrs (million) 30,994.30 Apr.20 31,251.60 Apr.21 Labour Force (x1000 people) 18,585.40 Apr.20 20,267.50 Apr.21 Employed (x1000 people) 16,141.60 Apr.20 18,627.20 Apr.21 Unemployed (x1000 people) 2,443.90 Apr.20 1,640.30 Apr.21 Unemployment rate (%) 13.10 Apr.20 8.10 Apr.21 Natural Rate of Unemployment Min. 6% to Max. 7% Last date modified: 2021-06-012,400,000 2,300,000 2,200,000 2,100,000 2,000,000 1,900,000 1,700,000 1,600,000 1,800,000 1,500,000 Q1 2007 Q2 2007 Q3 2007 GDP (Nominal & Real) Q4 2007 Q1 2008 GDP Real Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Inflate 2009 Crisis Financial Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 GDP Nominal Q3 2011 Q4 2011 Q1 2012 Q2 2012 - Nominal GDP (Current Prices) Q3 2012 Q4 2012 2012=100 Base Year Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 1Q21 (Base 2012=100) Nominal Vs Real GDP - Q3 2014 Q4 2014 Q1 2015 Q2 2015 - Real GDP (2012=100) Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Nominal GDP Q2 2018 Q3 2018 Q4 2018 Q1 2019 - ~ Deflate \\ Q2 2019 Q3 2019 Real GDP Q4 2019 Q1 2020 Q2 2020 Q3 2020 Covid-19 2020 Crisis Q4 2020 Q1 2021-14.00 -11.00 -10.00 -12.00 -13.00 -7.00 -5.00 -6.00 -3.00 -2.00 -1.00 -9.00 -8.00 0.00 3.00 5.00 2.00 1.00 4.00--. 1. Real GDP (% Change) -4.00 HOW8484) 1007 2007 3007 4007 1008 2008 3008 4008 1009 2009 Financial 2009 Crisis 3009 4009 1010 2010 3010 4010 GDP Growth (Rate %) (2012=100) 1Q11 2Q11 3011 4011 1Q12 2Q12 3012 4012 1Q13 2013 3013 4013 % Change in Real GDP (1Q21) ( Recession is Officially Over!) 1Q14 2014 3Q14 4014 1Q15 2015 3015 4015 1Q16 ...*..*: Linear (GDP Growth (Rate %) (2012=100)) 2Q16 3016 4016 1Q17 2017 3017 4017 1Q18 2Q18 3Q18 4018 1Q19 GDP % 2Q19 3019 4019 Covid-19 2020-21 Crisis 2Q20 3Q202. Unemployment Rate (% of Unemployed Population / Total Labour Force) Unemployment Rate (%) 13.00 April 2021 12.50 12.00 11.50 11.00 10.50 10.00 9.50 9.00 8.50 8.00 7.50 UN % 7.00 5.50 6.00 L - 5.50 5.00 4.50 -> Unemployment rate (%) 4.00 1000 1001 3001 1002 3002 1003 3003 1004 3004 1005 3005 1006 3006 10 3007 1008 3008 1009 3009 1010 3010 1011 3011 1012 3012 10 3013 1014 3014 1015 3015 216 3016 3017 101 301 1019 3019 1Q20 3Q20 Q21\fInflation Rate (% Change in CPI) - Bank Of Canada Total CPI, CPI-trim, CPI-median, CPI-common and Target Range 596 Show all 496 3% 296 196 096 -1% 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 1996 1998 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Target range Total CPI CPI-trim X CPI-median X CPI-common