Financial system - Assignment Example

rough taxation of the various economic activities and in turn providing essential services such as health care, public mortgages affordable, education, and defense. The governments are always not taxing directly, but their presence if often felt through the regulatory concept that they execute in areas such as licensing, wage bill, foreign ownership, and safety of products. The concept of macroeconomics often focuses on the details in the market for particular goods and services instead of the economic principles such as unemployment, economic growth, total output, and inflation.

The macroeconomic policy divides the economy into monetary policy and fiscal policy. Fiscal policy refers to the set of decisions that the government makes in consideration of spending, taxation, and spending. There are various dimensions for the government’s fiscal policy specifically at the central level because revenue can be earned through various kinds of taxes and it can occur on infinite products in separate geographic regions aiming at different beneficiaries (Fender, 2012). Monetary policy refers to the collection of decisions that a government make through the central bank of state concerning the issue of the amount of money that circulates within the economy.

In Canada, the monetary policy is done through the adjustment of very short- term interest rates in order to achieve a rate of monetary expansion. This depends on the maintenance of a minimum and stable rate of inflation. The monetary policy is operated by the bank of Canada. A major corporation of crown is under the supervision of the government. Therefore, there is a considerable independence from the central government but not a major issue in the legislative context. Since the financial capital can flow easily and smoothly within the state of Canada, the interest rates on the same assets are constant across all different geographic regions in Canada.

This has eventually made an outcome of one financial policy or