COMMERCE 1B03 Chapter Notes - Chapter 4: Government Debt, Money Supply, Old Age
14 Oct 2018
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Department
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Professor
●A lower debt means that less money will need to go towards paying down the national debt and
any outstanding interest. Reducing gov. Spending on interest charges will allow the gov. to
spend more money on social programs or lower taxes
●Lower taxes will stimulate the economy, as companies will have higher net profits and
individuals will have more disposable income
●Reductions in the national debt have been the result of surpluses: an excess of revenues over
expenditures
Federal Budget
●Most years the government releases one major document that sets out where and how it plans
to collect and invest taxpayers money
○How much money will go to pay down the debt?
○How much to health care?
○Will there be more money for R&D?
Will taxes go up or down?
●It's a blueprint for how the gov. Want to set the annual economic agenda
●Public debt is not the same as the aggregate of the pop. consumer debt
●The fed, prov, and municipal gov. Are separate entities and each level issues its own budget
○Approx. 50% of Ontario's budget goes to management and salaries
Using Monetary Policy to Keep the Economy Growing
●Monetary Policy: the management of the money supply and interest rates
●Controlled by the Bank of Canada
○When the economy booms, BOC raise interest rate in order to control inflation
○Money is then harder to borrow, businesses borrow less, economy slows
Government Expenditures
●Governments pay our billions of dollars to the
○Unemployed
○Old age pensions
○Low-income families
○Workers compensations
●Direct and indirect aid packages are provided by all levels of government
Document Summary
A lower debt means that less money will need to go towards paying down the national debt and any outstanding interest. Spending on interest charges will allow the gov. to spend more money on social programs or lower taxes. Lower taxes will stimulate the economy, as companies will have higher net profits and individuals will have more disposable income. Reductions in the national debt have been the result of surpluses: an excess of revenues over expenditures. Most years the government releases one major document that sets out where and how it plans to collect and invest taxpayers money. It"s a blueprint for how the gov. Public debt is not the same as the aggregate of the pop. consumer debt. Are separate entities and each level issues its own budget. 50% of ontario"s budget goes to management and salaries. Using monetary policy to keep the economy growing. Monetary policy : the management of the money supply and interest rates.
