Canadian Economics Policies and employment Research Paper

Canadian Economics Policies and employment - Research Paper Example The control of money supply eventually leads to the changes in interest rates prevailing in the economy. These changes are generally introduced so as to influence other macroeconomic variables / factors, which include employment trends in the country, balance of payments, aggregate demand and supply and production, inflation rates, etc. It cannot be stated that there is a uniform or universally acceptable structure or model for devising the monetary policy of an economy, and depending on the particular characteristics and issues faced by an economy and the dynamics of national and international financial markets, every country designs its monetary policy in its own way (Bernanke & Mishkin, 1997). The objective of intervention in the economy by a country’s government through monetary policy has been largely to influence varying macroeconomic indicators, as mentioned in the previous paragraph; however, the techniques and methods of doing so have revolutionized on a continuous ba sis, which are built upon the conventional mechanisms of controlling inflation, unemployment rates and other variables (McEachern, 2011). The most important change noted in the techniques used to control macroeconomic variables through monetary policy is the shift from direct controlling of money supply through direct intervention of Central Banks to indirect controlling and depending upon market mechanisms and forces to act in a favorable manner (Hirschey, 2009; Nadal, 2001). Keeping in view this background, the present study aims at determining the relationship between monetary policy and inflation trends, with particular reference to the Canadian economy. In this regard, following research question has been formulated, which will be answered on the basis of analysis conducted by researcher in this report. Research Question The research question, which is to be answered in this study on the basis of analysis and findings, is: What is the nature of relationship between monetary pol icy and inflation, with specific regard to the Canadian economy? Keeping in view this research question, this study can be considered as an important contribution to the existing literature pertaining to the relationship between monetary policy and inflation in Canadian economy. Moreover, the fact that this study includes application of various macroeconomic factors and policies, it can therefore be regarded as an important research work for individuals interested in exploring the macroeconomic environment of Canada and how different factors correlate in a practical environment. Research Method Adopted There are two broad approaches of carrying out a research work, which include qualitative and quantitative research approaches. A qualitative research approach requires the researcher to assess information on the basis of its qualitative attributes and aspects. The qualitative research approach may not necessarily produce quantitative results, as it does not make use of quantitative a nalysis of the information. On the other hand, following a quantitative rese