Keynesian Policy Canada: Fiscal and Monetary Approaches

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Keynesian Policy Canada: Fiscal and Monetary Approaches

Answer to question 1:

The Keynesian perspective of government intervention believes that as the wage is rigid, changes in spending, investment, consumption, and government expenditure can result in a change in output. In contrast, the neoclassical perspective believes that wage is flexible and thus, through a market-driven process economy will adjust itself.

Given the state of the economic situation in Canada, I would like to go with the Keynesian perspective of fiscal and monetary policy. As the economy is facing a fall in growth and moving towards recession, it is expected that government should bring in expansionary fiscal policy. This way, through the additional budget allocation to infrastructural development, job creation…