To mitigate the harmful effects of covid 19 on the Canadian economy, the Government of Canada has implemented several budgetary measures including:

-Canadian emergency service.

-the Canadian emergency benefit for students.

-the emergency wage subsidy from Canada.

-the emergency account for Canadian businesses.

-the deferral of the payment of taxes.

Question:

A. assume the Canadian economy was at full employment before the Covid. Because of the Covid19 pandemic, will the Canadian economy be in a balanced state of underemployment?

Justify your answer.

 

As a result of the covid pandemic , the production levels in the economy have declined.

The investments have decreased and also the consumption has fell due to loss of income. The economy is running from the recessionary phase. In such a scenario , the economy will not be in a balanced state. The unemployment rate is soaring high.

Step-by-step explanation

The government has launched various policies and packages to stimulate the economy as mentioned above. But till the time the economy regains the potential , there will be underemployment in the economy. Because of the high rate of unemployment and rising prices , people will be ready to work for any wages rather than sitting unemployed so that they are able to carry out the necessary consumption. Hence the economy will be in state of under employment.