Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Government Borrowing: Monetary Theory and Policy - Assignment Example

Comments (0) Cite this document
A paper "Government Borrowing: Monetary Theory and Policy" reports that the government of Canada recorded net lending and borrowing at -77.61 billion Canadian Dollars. Canadian government projects that net lending and borrowing will be 0.26 billion Canadian Dollar…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.9% of users find it useful
Government Borrowing: Monetary Theory and Policy
Read TextPreview

Extract of sample "Government Borrowing: Monetary Theory and Policy"

Download file to see previous pages The government borrows majorly through issuing treasury bills, Canada Savings Bonds, and marketable bonds in domestic and foreign markets. The Financial Administration Act dictates that Governor in Council has the mandate to authorize the Minister to borrow money on behalf of Her Majesty in the right of Canada. The government borrowing has been too high and the interest is very low. The government Canada reported net debt of approximately $ 616.9 billion in the fiscal year 2010-11. This was a rise of $ 34.4 billion from 2009-10. Canada’s total government net debt-to-GDP ratio hit 30.4 percent in the year 2010 (Department of Finance of Canada, 2012). This paper will explore the issue of high government borrowing and low-interest rates. It will give economic measures to tackle the problem in Canada. The level of government borrowing is a crucial ingredient of fiscal policy and management of aggregate demand in any economy. When an individual government runs a budget deficit, it implies that in that fiscal year, total government spending exceeds total tax revenue. When a government experiences a deficit in its budget estimates, it has to borrow in order to bridge the gap. This forces the government to issue its debt as Treasury Bills and long-term government bonds through the central bank. The negative effects of the Canadian government’s high borrowing are duplicated in the financial statements of the country. In the 31 March 2011, the Department of Finance of Canada announced that interest-bearing debt was $ 801.8 billion. This was an increase of $ 39.0 billion from the year 2010. Similarly, the un-matured debt was higher by 32.0 Canadian dollars. In addition, liabilities for pension and other benefits for employees went higher by 7.3 billion Canadian dollars. Increase in government borrowing through issuing of bonds such as treasury bills and securities to pay interest in fixed period or indefinitely (Department of Finance of Canada, 2012). Canada has not registered positive results fiscal stimulus. The economic stimulus seems it is not effective. The government borrowing has led to low-interest rates making the government run a budget deficit. In addition, fiscal stimulus has demonstrated inflationary effects that results from high demand. Fiscal stimulus entails the proposition that through borrowing money and spending it, the government can raise the state of the economy. This is through raising inputs and lowering the numbers of jobless. Fiscal stimulus can increase aggregate demand. Theoretically, printing money can be a form of fiscal stimulus. This is because money counts as a transfer payment. People will have a lot of money because of increased printing. However, in practice, people do not just keep many dollars of their extra cash. People will spend the extra amount of money creating demand for services and goods. The increased aggregate demand leads to inflation. This is the state bedeviling Canada. The high borrowing of government seems to create problems rather than to develop the economy in Canada. When the government borrows money from the private sector this corresponds to the increase in spending on its part. However, government borrowing limits the spending of the private sector. This, therefore, implies that job opportunities, which fiscal stimulus seeks to created are offset through a decline in private spending. Canada is grappling with the same situation. ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Essay on Government Borrowing Example | Topics and Well Written Essays - 1000 words”, n.d.)
Essay on Government Borrowing Example | Topics and Well Written Essays - 1000 words. Retrieved from
(Essay on Government Borrowing Example | Topics and Well Written Essays - 1000 Words)
Essay on Government Borrowing Example | Topics and Well Written Essays - 1000 Words.
“Essay on Government Borrowing Example | Topics and Well Written Essays - 1000 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Government Borrowing: Monetary Theory and Policy

Bandura's Philosophy Theory

His memories are an accumulation of yesterdays. In yesterday's are written his dealings to others and to himself. He finds life more meaningful in the lives of others. His reason for living is to serve others because he learns more of himself by dealing, relating with and loving others. Hence his motto in life is: “Do to others what he wants others to do to him.”

Bandura’s theory confirms the reality of the experience. A man needs mirroring of others to tell him whether what he is doing is fine or not. The wife is the best critic of the husband and vice versa. This is what makes marriage a wonderful ground for discovery for the two is made into one yet uniqueness of each is still there.

7 Pages(1750 words)Coursework

Has Government by States Given Way to Inter and Non-State Governance

The application of theories related to the state and its governance can be proved very helpful towards the creation of an effective and well-structured state. However, the phenomenon of a ‘subjective’ interpretation of the above theories is common especially when there are specific targets that need to be achieved by the interested parties (usual participants in a state’s political or social life). For this reason, it is necessary that specific rules and guidelines are followed when studying and interpreting the views of theorists regarding the position, the role and the power of the state.

Within the state, there are many ‘political’ and ‘social’ forces that try to impose their...
10 Pages(2500 words)Report

United States Foreign Policy from 1945-1991

American Presidents presiding over some key events in history, such as the Cuban Missile Crisis, The Cold War, The Vietnam War, etc., were hindered from acting as public representatives due to pressure from the military-industrial complex. John Kennedy, Lyndon Johnson, Ronald Reagan, George Herbert Walker Bush, and George W. Bush – all of them were subject to these opposing interests. But eventually, the corporate-government nexus proved too powerful; and in this sense, American Presidents after the Second World War were largely restricted and powerless to uphold their higher personal values. Most of the strategic moves on part of the United States after the end of the Great War were directly in response to an anticipated th...
11 Pages(2750 words)Essay

International Trade Theory

 Further to this, it is also believed that international trade can bring substantial economic welfare to the countries however still most of the countries do not view it as a favorable thing. Despite having a very promising and bright outlook, international trade has been largely viewed with suspension and it is because of this that governments impose barriers to restrict international trade. There can be many reasons behind this act of imposing restrictions or blocking international trade however there are also benefits on the other side too.

International trade has driven the attention of many of the brilliant minds in economics therefore the origins of the economic theory on international trade owe much to the c...
6 Pages(1500 words)Case Study

Social Theory in a Globalizing Age

A comparison between the followers of social theories and the followers of natural sciences (physics and chemistry) revealed that unlike followers of natural sciences social theorists don’t use any techniques to show the exact knowledge or skill. Instead, they prove their work or idea by suggesting a possible way of explaining the facts or arguments usually called hypotheses (Lemert, 2004).
By hypotheses, social theorists cannot easily prove their argument at a time but they require time to prove it. Social theorists are normally criticized for using the hypotheses. Deconstructionists or postmodernists, rigidly critical theorists, disagree with the criticism by mentioning that any research methodology is not 100% pure a...
10 Pages(2500 words)Assignment

Information Security Policy of Organization

In the modern age of information technology, there are many threats created for organizational information. Organizations need a security model that has the capability to handle and secure our information reserves. Technical administrative safety /security measures like security plans, actions and procedures are the general practices for the organizational information security procedures. The attentiveness of producing actions is concerned by the organizations to an appreciably smaller level, on the other hand at the same time these are weighed up as being further efficient organizational actions than technical administrative ones. Information security encompasses organizational features, officially authorized aspects, institution...
6 Pages(1500 words)Research Paper

Strategies of the South African Government

Maslow has argued that security and safety are required by all human beings (Boeree 2006). According to the Federation Internationale de Football Association (2009), Uruguay was the first nation to host the Fifa World Cup. In 2010, South Africa would be the first African nation to host the next World Cup. But Euromonitor (2009) considers that South Africa is a country with a significant rate of insecurity that would influence the trip to South Africa. Various security strategies will have to be reviewed by the South African Government in order to implement security and safety during this big event (Republic of South Africa, 2008). To accomplish the safety of the tourists during the World Cup 2010, many South African cities have in...
17 Pages(4250 words)Research Proposal

Free Cash Flows Theory

These are not hard and fast rules in determining the capital structure which should best affect a firms value. These theories lay down the benefits and the costs when a firm chooses what it sees as an adequate mix to maximise the shareholders value.

One of the implications where this research can lead include the possibility of the effectiveness in maximising shareholder value by employing two or more theories in capital structure decisions. Because these theories are more conditional by nature, probing which combinations when used for capital structure decisions are more effective in arriving at the goal of maximising firm value can be another subject for further research.
The role of capital structure in increasi...
11 Pages(2750 words)Case Study

European Union Policy: Turkey

...Running Head: European Union.... Topic: European union policy Order#: 377392 Topic: European union policy Profile of Turkey-history, geography and population: “Area: Approx 780,000 sq km (300,000 sq miles) Population: 71.9m (July 2008 est) Capital city: Ankara People: Majority Turks. Minorities recognised under the Turkish Constitution: Jews, Armenians and Greeks. Other ethnic peoples include Kurds, Circassians and Bosnians. Language: Turkish (official), Kurdish Religion: Muslim Currency: Turkish Lira (TL) Government: Parliamentary republic. Membership of international...
9 Pages(2250 words)Case Study

Management Theory and Practice in the Early Childhood Education Industry

...Management Theory and Practice in the early childhood education industry This Report applies management theory into practice in the early childhood industry, especially in the context of women leaders. Management issues play a significant role in the academic sector, because early childhood professionals need higher levels of motivation in order to avoid burnout . As pointed out in a study by Osgood and Halsall (2007) where they carried out research to examine the position of women in leadership or management positions, a “glass ceiling” exists for women in the academic setting, which could significantly impair motivation. Since many of the individuals employed in the early education sector are women, addressing this issue is even more...
6 Pages(1500 words)Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Assignment on topic Government Borrowing: Monetary Theory and Policy for FREE!

Contact Us