CSC Chapter 5

Elements in the economy which mitigate the extremes of the business cycle by running counter to it. Example: government
payouts for unemployment insurance in recessionary periods.

The minimum rate at which the Bank of Canada makes short-term advances to the chartered banks, other members of the Canadian Payments Association and investment dealers who trade in the money market.

One-hundredth of a percentage point of bond yields. Thus, 1% represents 100 basis points.

Occurs when total spending by the government for the year is higher than revenue collected.

Occurs when government revenue for the
year exceeds expenditures.

Established in the 1980 revision of the
Bank Act, this association operates a highly
automated national clearing system for
interbank payments. Members include
chartered banks, trust and loan companies
and some credit unions and caisses

A cash management open-market operation
pursued by the Bank of Canada to influence
interest rates. A drawdown refers to the
transfer of deposits to the Bank of Canada
from the direct clearers, effectively draining
the supply of available cash balances. See
also Redeposit.

An investment dealer appointed by a
company or government to advise it in
financial matters and to manage the
underwriting of its securities.

The policy pursued by the federal government to influence economic growth through the use of taxation and government
spending to smooth out the fluctuations of the business cycle.

Economic policy developed by British
economist John Maynard Keynes who
proposed that active government
intervention in the market was the only
method of ensuring economic growth and
prosperity. See also Monetarism.

A Canadian Payments Association
electronic system for the transfer of large
value payments between participating
financial institution.

School of economic theory which states
that the level of prices as well as economic
output is determined by an economy’s money supply. This school of thought believes that control of the money supply is
more vital to economic prosperity than the level of government spending, for example. See also Keynesian Policy

The accumulation of total government
borrowing over time .It is the sum of past
deficits minus the sum of past surpluses.

The interest rate set in the overnight market – a marketplace where major Canadian financial institutions lend each other money on an overnight basis. When the Bank changes the target for the overnight rate, other short-term interest rates also usually change.

School of economic theory which argues
that investors are rational thinkers and can
make intelligent economic decisions after
evaluating all available information.