Analyzing Fiscal Policy Plans in the 2017 Budget

ANALYZING FISCAL POLICY PLANS IN THE 2017 BUDGETByInstitution
Analyzing Fiscal Policy Plans in the 2017 Budget
Government plays a critical role in the development of the economy of nations by managing resources to provide positive outcomes for the people. Fiscal policies are the government’s plans on how to use or get resources, which have a significant effect on the aggregate demands and output. The government of Canada announced its 2017 budget plans on how to spur the economy for the next 12 months. This study analyzes key fiscal allocations and strategies employed in the budget and their effect on the general economy.
Government Spending and Deficits
The government of Canada seeks to spend over $330.2 billion in financing the current budget against a $304.7 billion collected over the period 2017/18 (CBC NEWS, 2017). This shows that the government will run short of $28.5 billion in its budget, which possibly can come from borrowings from financial institutions, other governments, or by selling bonds. According to financial analysts, the deficit will fall gradually over the next five years, but only at $18.8 billion by 2021/22. Already there are optimistic and pessimistic projections for the budget to improve or depreciate by $5.8 billion and $6.2 billion annually respectively.
The multiplier effect of the aggregate demand during the fiscal year will definitely lead to increase in aggregate demand, due to more spending in the budget as compared to taxes. Increased government spending will impact the economy positively, increasing the flow of money and increment in economic activities. The government seeks to support several social activities and economical activities such as research and development, provision of housing for indigenous people and encouraging innovation. Some fiscal policies employed at favoring supply for growth include supporting secondary education, research and development and increasing the competency of Canadian workers, therefore encouraging economic growth.
Encouraging Innovation and Reducing Unemployment
The budget 2017 shows how the Canadian government is taking a hands-on approach in safeguarding the economic. The increased spending by the government accelerates the economy by increasing aggregate demands. In order to fight unemployment and increase the ability of the middle class to create jobs for the increasing population, the government aims at spending $400 million over the next three years to support a new venture catalyst program, $950 million over the next five years to support innovation and research and development in several fields (CBC NEWS, 2017). These initiatives aim at encouraging startups and aspiring business people and innovators to create sustainable ventures that will help the na...