Consider the following macroeconomic data on the economy of Canada.

Question

Canadian macroeconomic data 2016 2017

Consumption spending $1,156 b $1,211 b

Investment spending $464 b $504 b

Government spending $426 b $442 b

Net exports -$48 b -$49 b

Employed persons 21,800,000 21,600,000

Unemployed persons 900,000 850,000

Working age population 28,200,000 28,300,000

Consumer price index 128 136

Using the expenditure approach, calculate GDP for Canada for 2016 and 2017 and calculate the percentage change in GDP over the two years. (3 marks)
Calculate the unemployment rate and the labor force participation rate for both years. (2 marks)
Using the CPI as a measure of price changes, calculate the inflation rate for 2017. Given your inflation estimate, would you rather be a saver or a borrower in the Canadian economy? Explain why. (2 marks)
Given your answers to Questions 1, 2 and 3, what stage of the business cycle do you think Canada is experiencing in 2017? Explain why. (3 marks)

Answer 1

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