Video Cases - Part II

These questions are based on videos from the Canadian Broadcasting Corporation that accompany the textbook. In addition to whatever in-class use your instructor may have given them, they're available on this website for online viewing. If directed to do so by your instructor, you can answer the questions online and email the results.
     These videos are intended only for students using the 9th Canadian Edition of Macroeconomics. To view the video, you'll require a password. Refer to page 42 in your textbook and use the first word appearing in the main text column as both 'username' and 'password.' Use of the word is case-sensitive.
     The free RealPlayer plug-in is required in order to view the videos. If needed, the plug-in can be downloaded from Real.

The federal government in Ottawa has a large budget surplus, but it is not clear on how the government plans to spend it. Should it reduce taxes, increase spending or pay down the debt? If it plans to reduce taxes, then where and for whom? If it plans to increase spending, then in what areas, healthcare, childcare, roads, etc.? If it plans to pay down the debt, then how will this be beneficial? Various economists, politicians and others who have a stake in the allocation of the surplus give their opinions on what should be done and why it should be done. There are many valid arguments given for the various options available.

Concepts covered: Fiscal Policy, inflation, revenues, outlays, aggregate demand, aggregate supply, discretionary spending, automatic stabilizers, the multiplier.

Required: 1) Watch the video carefully 2) Read the key economic concepts found on pages 3-4 of the text 3) Answer the questions below, either individually or as part of a small group.

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View Surplus Politics

1		If you were the finance minister, what would you do with the surplus? As you have seen in the video, many people have differing opinions on what should be done with it. Include any economic implications of your actions in your answer. For example, what are the implications on the economy of increased spending? Will this cause inflation or help stimulate job creation and bring us toward full employment?
2		Some people would argue that the fact that a surplus exists means that the federal government is taxing us at a higher level than is necessary. As a result, taxes should be lowered. If taxes are to be lowered, in which ways can the federal government do this? In other words, comment on the specific ways it can reduce taxes.
3		Suppose that none of the surplus is used to pay down the debt, how can the existing debt be a burden to future generations?
4		What are the factors that have allowed the federal government to incur a relatively large budget surplus during the mid – to late – 1990s and early 2000s?