How Did the Global Recession Affect
Canada’s Economy?
Canada weathered the global financial crisis
and recession better than many of its peers,
principally as a result of the better policies and
regulations already in place. Canada was in a
much stronger position going into the recession
thanks to its low and declining government debt
and budget surpluses. The design of government
policy and the speed of the policy response can
make a huge difference in preventing or mitigating the worst of a recession.
Source: Conference Board of Canada,
March 2011
a. Explain the potential demand-side effects of
“low and declining government debt and budget surpluses.”
b. Explain the potential supply-side effects of
“low and declining government debt and budget surpluses.”
c. Draw a graph to illustrate the combined
demand-side and supply-side effects of “low
and declining government debt and budget
surpluses.”