Bank of Canada Week 8

Inaion forcibly restricts consumpion by exacing the

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ailable, the more financial transacIons occur for goods and services. •  The more that people are buying, the more physical money is needed. •  Banks buy new bank notes off of the Bank of Canada by selling government securiIes. •  These securiIes are assets for the government; bank notes in circulaIon are liabiliIes. InflaIon •  InflaIon is the rise in the cost of goods and services in the economy over a period of Ime. •  If the cost of goods goes up faster than the rise in wages, the consumers buying power is less than it was previous. •  High inflaIon is bad for the economy. •  An excessive growth in money supply can cause inflaIon. If money supply occurs faster than economic growth, inflaIon will result. Is inflaIon good or bad? •  hWp://www.bbc.co.uk/news/ business- 14115829 To intervene, or not to intervene, that is the quesIon! Keynes •  hWp://www.youtube.com/watch?v=qIp5- TKu_1g&feature=fvwrel Milton Freidman (1912- 2006) •  Expansion of money supply leads to inflaIon; governments should focus on price stability. •  Felt that changes to real wages and real interest rates iniIally...
View Full Document

This note was uploaded on 01/26/2014 for the course LAPS ADMS 1010 taught by Professor D.jurkowski during the Winter '10 term at York University.

Ask a homework question - tutors are online