1. The Depression taught Canada how to deal with economic shocks of demand and supply. Since then Canada has utilized reviewed and updated policies to regulate the economy.The fiscal policies are geared towards keeping the goods market stable while the Monetary policies are geared towards keeping the financial markets in equilibrium through the exchange rates, interest rates and money supply. Monetary policy in Canada aims to increase output and income and simultaneously keep inflation at …showed first 75 words of 357 total…

…showed last 75 words of 357 total…as stabilizers of the market. When the economy slows , tax revenues decrease and payouts increase to buffer the effect on personal disposable income and reduce the size of the output shock. This helps keep the goods market in equilibrium. Using these monetary and fiscal policies to regulate and stimulate the economy, the Central Bank and Government of Canada try to keep economic growth , full employment, inflation and overall standard of living at their optimal levels.