what the bank of canada tries to do
Published on Dec 25, 2015
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PRESENTATION OUTLINE
what the bank of canada tries to do
mr. melkonian
remember the business cycle?
expected ups and downs of the economy
When economy is doing well...
- people borrow money for a house/car/big ticket item
- business borrow to expand
- chartered banks will give money to people with good credit scores
but then there's inflation...
so.... the bank's role?
party pooper...
raise interest rates, restrain borrowing, slow growth of money supply
but they just want to slow it down
not completely stop it-or we get recession
Economy is doing poorly...
- less production, consumption, and investment
- higher unemployment
bank will try to increase spending
by lowering the interest rate-people want to borrow money
Photo by kevin dooley
easy money
curbs recessions, low interest, easily available credit
tight money
restrain economy in times of expansion, higher interest rates, tougher on credit
role of interest rates
influences the value of the canadian dollar internationally
Photo by Nick Kenrick.
dollar value is low-investors want in
consequently interest is also high at this point
government budget affected too
more money to spend on interest debt, less on other stuff
consumers
house, car, appliance, furniture
government
they're buying stuff regardless... if there's higher interest rates? lol more tax
individuals
how much they have in bank accounts-higher means bank has more available
banks
want to suppl all the money when interest is high
changes in interest rates
Photo by Tony Fischer Photography
