POLI 2F30 Lecture Notes - Lecture 10: Pax Britannica, Deflation, Industrial Revolution
21 Mar 2018
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Document Summary
How do states intervene: governments and central banks: no private corporation, need independent monetary policy. Canada: boc: private at founding 1934, crown corporation 1938, but not a government department. Fiscal policy: tool used by government to influence the economy, taxation, spending. Monetary policy: what central banks do to influence money supply, managing currency values, quantitative easing, interest rates. Introduction of new$ into money supply: purchasing government securities/bank securities by central bank with electric money ( new electric money, debt rises in both private and public sectors, but usually prices rise as well. Low for recessionary trends promote lending: central banks relied on interest rates, raise for inflationary trends curb spending, but no longer sufficient. Increasing amount of money chasing a fixed amount of goods: prices increases, currency value decreases. Demand pull: demand up more quickly than production, cost push, supply side cost increases. Less money chasing more goods: prices decline over time, money becomes more valuable.
