Question

1. The Canadian federal debt in 2016–17 and 2017–18 has been restated. Why?

	a.To reflect a change in the GDP growth rate.
	b.To reflect a change in the discount rate methodology used in determining the present value of the Government’s unfunded pension obligations.
	c.None of the other answers.
	d.To reflect a change in the definition of federal debt.

2. Explain in one sentence why the government debt as a % of the GDP is more than 100% in 2017 using OECD data (slides of chapter 1) and less than 30% using the data of the Department of Finance, Canada (Table 9, annual financial report of the government of Canada, 2017-2018).

3.Which are the three major program expenses (transferring money to persons) in the 2018 Canadian budget?

4. Fill in blank

( )is not the only criterion to choose a regulatory policy in Canada. A ( ) of who gains and loses can be determinant to choose a regulatory policy.

5. Imagine there is an economy with pure exchange with two individuals (1 and 2). A, B and C are three points that belong to the utility possibility frontier (UPF) of the two individuals.

Points	U1	U2
A	2	7
B	5	5
C	7	2

According to the information of the previous table, is the following statement true or false: "The point D (2,5) belong to the UPF"

Question:

A. true

B False

Explain your answer to the previous question.

6. Using the information in question 5, if the Social Welfare Function (SWF) of this economy is W= U1+ U2. Which of the points A, B, C or D maximizes the SWF?

In the cell below write the total Social Welfare of the point that maximizes the SWF (a number) and in question 7, write the letter of the point that maximizes the SWF.

7. Write the letter of the point that maximizes the SWF.

Answer 1

1. The Canadian federal debt in 2016–17 and 2017–18 has been restated. Why?

Answer) To reflect a change in the GDP growth rate.

REASONING) The Canadian federal debt in 2016-2017 and 2017-28 had been restated in order to reflect a change in GDP growth rate. According to the report released by the Department of Finance of Canda, the net debt to GDP ratio was 40.0% in 2016-17 whereas it was 31.3% 2017-18. Real GDP grew at 3.0% and the nominal GDP grew 5.4% in 2017 showing a change in growth rate of GDP.