11.6 Key Terms
Key Terms
A policy to lower price level and contract economic growth by raising the overnight interest rate target and decreasing money supply through selling securities which the Bank uses when the economy is experiencing inflation.
A policy of lowering the overnight interest rate target and increasing money supply to boost economic growth.
Tools used by the Bank of Canada to control the money supply and promote economic growth.
The money demand and money supply functions and the equilibrium in the money market occurs where the money demand curve intersects the money supply curve.
A 2% target set by the Bank of Canada and the federal government.
The target for the overnight rate that the Bank expects to be used in financial markets for one-day ("overnight") loans between financial institutions.
An aim to maintain a stable price environment over the medium term.
A tool to raise the overnight interest rate target where the Bank of Canada gets money from financial institutions so they are left with less in reserves and the decrease in money supply drives up the interest rate.
