CH8: Stabilization Policy

Source: http://goldinvestingnews.com/4099/gold-price-hits-record-high-–-further-to-go.html

Summary:

This article is talks about the rapid value growth of gold. In previous years, studies said that the value of gold and the U.S. dollar had an inverse relationship, but now, the price of gold has been steadily increasing. On May 12, 2010, gold reached a record of $1243.10 an ounce in New York. It is expected that gold will skyrocket up to approximately $2000, $3000, or maybe $5000 per ounce. On the other hand, gold analysts state that the price of gold won't grow at such a remarkable rate and that it will probably take years.

Connection:

The discovery of gold may seem like a very appealing and attractive event, but having such a rare metal increase in value drastically would also mean economic growth. This economic growth could possibly lead to inflation which might interrupt price stability. As the country continues to develop, more money will be circulated and when banks see such a situation, plans have to be made to control the inevitable problem of inflation. Like all banks, interest rates will be increased to discourage spending and encourage investing/saving. As a result of increasing interest charges, the economy's inflation would be controlled.

Reflection:

I believe as long as the value of gold increases, less and less people will be willing to buy it, resulting in a decrease in quantity demanded. Having said this, it might also be one of the factors that is slowing down economic growth. If people buy and sell less gold, then the circulation of money will be limited even more. With circulation of money slowed down, then the bank may find that it may not be necessary to impose heavier interest rates on citizens. However this might not be the case because many other parts of the world may find this new source of gold very profitable and may purchase it which will also result in economic growth and inevitably, inflation.

CH5: Economic Indicators

Source: http://www.nationalpost.com/news/story.html?id=2777393&p=2

Summary:

It is now very apparent that Canada is emerging from the recession. The cities that lead this recovery are Vancouver, Toronto, and Hamilton. Paris-based Organisation for Economic Co-operation and Development forecasted that Canada will more than triple the growth rate than the other G7 countries. Due to the Olympics that took place in Vancouver, it has substantially contributed to Canada's economic growth. Toronto and Hamilton trail behind Vancouver because now they're starting to expand in manufacturing. In addition to that, the upcoming Canadian Grand Prix Race to Montreal will also create services and expand manufacturing in the hosting city.

Connection:

All these factors such as increased services, manufacturing, etc. will ultimately lead to an increased GDP growth rate. An indicator of this is employment. For example, the return of the Canadian Grand Prix race will lead to many jobs opening up. As these services becomes available upon the race's arrival, people around the globe will go to visit and inevitably spend money there. By spending money there, taxes will be collected which contribute to funding of schools, hospitals, retirements homes, etc. All of these things will contribute to increasing GDP growth.

Reflection:

I believe that out of all the factors that contributed to our rapid recovery from the recession is the Olympics, and in a broader view, employment. The Olympics created many job opportunities and the positions were filled with ease. As employment increases, so will income and GDP per capita. By having an increase in income, more consumers will readily spend money and by doing so, support the economy by paying taxes. Another source of employment increase lies in manufacturing which can be seen expanding in Toronto and Hamilton. Manufacturing probably has more long-term benefits than the Olympics. If more cities were following Toronto and Hamilton's lead, then our GDP growth will continue to surpass the growth of other G7 countries.

CH7: Money and the Canadian Banking System

Source: http://www.advancetitan.com/news/new-credit-card-policies-are-now-being-implemented-1.1221429

Summary:

This article explains how there are going to be more rules for people who are holding credit cards or are planning to. Some of these include how a person must be 21 or older to obtain a credit card, or they could get one by having an adult family member giving permission to get one. In a survey, it is found that a lot of college/university students aren't in need of credit cards, therefore as of now, the promoting credit card on school campuses are disallowed and the "free gifts" that are used to entice consumers are also banned. According to some sources, the ban on promoting credit cards will ease the burden known as debt that is building up on students.

Connection:

The connection between this article and forms of money is change. Although a new form of money isn't being introduced, the money is being altered and restrictions are placed on it. This could prove to be a benefit to some people like students, but on the other hand, it decreases the services that banks perform, resulting in less profit. In an economic point of view, this could prove to be an improvement because as students are getting/staying out of debt, they will be more likely to use money to support the economy. Although the physical appearance of the credit card is unchanged, the restrictions and benefits that the credit card provide can be seen as a lot different from a few years ago.

Summary:

Being a student myself, I believe that many students aren't in need of credit cards. Being so inexperienced, yet holding something of such value can be a heavy burden. One swipe of the card can result in a devastating debt. From the bank's perspective, they might drop from world bank rankings due to this loss of customers. From what I can see, the newly implemented restrictions on credit cards contain no benefit for banks. A downfall for the students on the other hand is that until you turn 21, you won't be able to build up a good credit history which allows for more benefits with banks.

CH 3: The Role of Government in a Market Economy

Source: http://www.thestar.com/news/ontario/hst/article/734394--hst-equals-hated-sales-tax

Summary:

75% of Ontario residents oppose the new HST tax that has yet to take effect. Opinions of many have changed about the government following the introduction the Harmonized Sales Tax (HST). The first day that the new tax was announced, various interest groups rioted and formed an anti-tax rally along with around 300 First Nations people. The First Nations are fighting for their freedom from this tax due to the fact that they already live in poverty and struggle to purchase products. It is believed that the tax will increase prices of a lot of necessary commodities like gasoline, heating fuels, etc.

Connection:

The obvious connection between this article and the chapter at hand is that the government is introducing a new tax which could affect the inflow and outflow of cash for a business. The new HST tax could prove to drastically reduce the amounts of revenue a company can generate. The demand for products in all markets could severely drop, except for the daily necessities that people require like milk and such. Some negative third party effects that might result would be that companies which earn profit by doing services that are not subject to HST might also not generate as much profit. This is because more money will be needed to operate the workplace which will lead to increased prices for the services. There is also the fact that because products are more costly now, consumers will likely not engage in paying for services that aren't necessary.

Reflection:

I agree with Ontario residents, the HST tax will cause a great financial burden on many people that are barely making a living and those that are already living in poverty. Due to the increased prices for homes and land, homeowners already have to pay increased property taxes. Now that this new tax comes along; things just gets worse. A lot of the HST tax money will go to education, but many people in our society don't benefit from that.