which controls interest rates and the money supply in Canada.
It influences interest rates by setting rates on short-term
loans that it makes to chartered banks. See also interest rates.
to trade or exchange material objects or services without the
use of currency.
a sum of money that an investor (like you) loans to a government
or corporation. They promise to pay it back after a fixed period
of time and in the meantime pay interest at a fixed rate. Bonds
may be bought at the time of issue or at any other time until
maturity. Canada Savings Bonds (CSBs) are similar to other bonds
except that they can be cashed in at any time for their face
value plus earned interest. They pay less interest to balance
a statement outlining the spending plans of a government or
an individual usually for the coming year.
usually refers to assets such as factories, offices, and machinery,
the goods that are needed in production and generally last many
years. When a person starts her own business she usually needs
to invest in some capital to get her started.
school of thought developed by Adam Smith. This theory holds
that there is no need for government regulation of the economy
since the of the market
will lead to the best possible results.
what develops when two or more producers are providing a similar
product or service. When there is no competition there is a
to increase in value. Compound interest is calculated on the
principal amount (the amount you originally invested) and also
on the interest earned on that interest in previous years. For
example, a deposit (or loan) compounded at 10 per cent annually
will double in about seven years if no money is taken out (or
the individuals and corporations that buy products and services.
In economics, consumption refers only to consuming that involves
a monetary transaction.
when a government gives money or a monetary break (like tax
cuts or subsidies) to a business. Governments give money to
businesses that are very profitable to keep them from moving
to other provinces or countries. The province of Manitoba spends
a lot more money on corporate welfare than it does on social
assistance ('real' welfare).
the price one pays in exchange for something. In economics,
cost is usually defined simply as how much money you pay for
something. However, there are costs beyond monetary price and
many prices do not reflect the true cost of items. For example,
the price of gas does not reflect the environmental costs associated
with driving a car.
the amount of money owed by a government, corporation, or individual.
the amount remaining if the amount of money spent is greater
than the amount of money received. This word usually refers
to the government's deficit which develops when budgets are
consumer's interest and ability in consuming products and services.
Supply compared with demand dictates price. It is assumed that
things that are in low supply and high demand will cost more.
Demand is increased through advertising and 'need creation'
activities as well as through the lack of available goods.
the study of the economy or the study of how to divide up a
world of limited resources.
the production, distribution, and exchange of goods and services,
usually measured in terms of the money which facilitates these
costs and payments made by a government, a corporation, or an
individual. Opposite of .
professionals that are trained to provide financial advice including
where and when to invest your money, and planning for retirement.
Such advisors charge fees to their clients or are paid commissions
by the institutions whose products they sell.
a business such as a bank or investment company that sells financial
products including GICs, bonds, stocks, and mutual funds. These
companies often charge no fees to clients but are paid by the
institutions (their own or another) whose products they sell.
represents all of these companies.
Gross Domestic Product, the total value of the goods and services
produced in Canada in a given year.
Gross National Product, the total value of the goods and services
produced in Canada's economy in a given year including things
a sum of money that an investor (like you) lends to a bank,
trust company, or credit union for a fixed number of months
or years. Interest is paid at a guaranteed rate at specified
times. All GICs have a maturity date, and only some may be cashed
before that time. Insurance companies sometimes use the name
a basic economic unit in which one or more people choose to
live together and share resources. Economic thinking is based
on this division of society allowing that not all members of
a household (for example children) bring in a monetary income.
money that comes into a personal, business, or government account.
Income can be generated in a number of different ways including
trading your work for wages and selling a product.
a general increase in prices usually attributed to a situation
in which there is too much money chasing too few goods, thus
driving up the price of all goods by driving down the value
of money. There are two major ways of calculating inflation.
is based on the
, a monthly
measure of how much the price of goods changes. Income inflation
is based on the change in wages and based on measures such as
the network of goods that make up the physical structure that
support other forms of economic and social activity such as
roads, water treatment plants, airports, and canals. There is
also a of institutions
a financial product that insures against risk. Insurance is
available for many risks including death, disability, fire,
health care, and theft. Insurance costs a certain amount each
month or year. It is always important to find out the coverage
and limitations of any insurance plan.
the cost of borrowing money. are the amount that the person borrowing the money
is charged, usually a percentage of how much she has borrowed.
refer to the
amount set by the Bank of Canada. Other banks usually decide
their interest rate as prime plus a certain percentage.
To invest essentially means to put the valuable things you own
into a form in which they will earn more money or other benefit.
Putting money in the bank is an investment because it earns
interest in the form of money. Buying a house is also an investment
because it gives you the use of the house and because houses
generally increase in monetary value over the years. Bonds,
GICs, and houses are fairly . Stocks
or shares in certain companies are because you never know how well the company
will do. Some people earn a lot on stocks; others lose a lot.
While people generally talk about monetary investments there
are other kinds. Love is a way of investing in people. Reading
is an investment in educating yourself.
the force Adam Smith believed would guide free market economics
ensuring that prosperity would come to all. See also .
the percentage of the population over the age of 15 who are
employed in paid work or who are actively looking for paid work.
a school of economics inspired by Adam Smith who believed that
if we would just let the market be, competition would create
order and eventually prosperity for all. See also .
usually refers to economic issues that concern the performance
of the economy on a national scale, such as unemployment, trade,
interest rates, and government budgets.
a setting in which occur.
For example, the refers
to the market in which workers sell their labour time and employers
purchase that time for a wage. A is one in which there are no regulations as to what
can be bought, sold, and traded and therefore nothing to ensure
the well-being of all peoples and the environment.
deals with the economic activity of individuals or small groups,
for example the impact of specific types of taxes on retired
women or the consequences of the deregulation of trade on garment
what develops when there is only one producer providing a service
a loan acquired for purchasing a home or other property. Like
other loans a mortgage has a time period and a rate of interest.
'Paying off' a mortgage means making regular payments of interest
and at the same time some payment to reduce the principal (the
amount borrowed). Mortgages can be set for short or long periods
a monetary investment that is put into a fund along with money
from many other investors. There are hundreds of such funds
in Canada, operated by hundreds of investment companies. Managers
of a particular fund, in turn, invest that fund's money in other
companies. Mutual funds vary widely in risk but are generally
considered higher-risk investments. The Crocus Investment Fund
is a Manitoba-based mutual fund that lends money to Manitoba
companies that meet specific criteria.
a theory that calls for the deregulation of the economy in order
to allow markets to set prices for all commodities, including
laissez faire economic theory which opposes state intervention
in the economy and believes in the free operation of the market.
a valuation system used to determine the monetary value of unpaid
work. Calculated as to how much a person loses in wages by taking
time away from the paid work force in order to do unpaid work.
See also .
the set of a person's investments including mutual funds, cash,
Guaranteed Investment Certificates (GICs), Canada Savings Bonds
(CSBs), stocks, etc.
one who produces the goods; opposite of consumer. Production
refers to the creation of goods and services that are available
areas of human activity that are not measured or counted in
national accounts. These include household activities, items
produced that are not marketed, and illegal transactions.
a valuation system used in determining the monetary value of
unpaid work. Calculated on the basis of how much it would cost
to pay someone else to do the work. See also .
an investment return is how much you get back from an investment
compared with the amount you invested. You never know how much
that will be. For example, the returns on a share in a company
may be very high or may amount to not much at all. If you're
lucky, the returns on investing time into a relationship are
a happy relationship for years to come.
various incomes and payments received by a government or an
individual. Opposite of .
people who own stocks or shares in a company and share in its
profits and/or losses.
investments made in a particular company. Returns on shares
and stocks are entirely dependent on how well that company does,
in other words, how much money it makes.
a grant given to off-set costs. An individual may receive subsidized
housing if she can't afford to pay the full price. A corporation
may receive a subsidy to grow food or to produce missiles.
the amount of goods and services available for consumers to
buy. Supply compared with demand dictates price. It is assumed
that things that are in low demand and high supply cost less.
Supply is increased when production increases.
the amount of money that remains when income is greater than
expenditures. The opposite of a deficit.
money the government collects from individuals and corporations
to fund the services it provides. Personal income tax is paid
by individuals while corporate income tax is paid by corporations
and businesses. There are two categories of taxes. serve to redistribute wealth within a country by ensuring
that the wealthiest people pay a higher percentage of taxes.
Income taxes are progressive taxes. In contrast, charge everyone the same
percentage of tax, no matter what their income level. The GST
is a good example of a regressive tax.
surveys that measure how citizens spend their time. Time-use
surveys are an important tool for measuring unpaid work and
have been used in Canada since the 1996 Census.
the exchange of money, goods, or services through buying, selling,
an assumption that the benefits of economic growth will eventually
trickle-down to the poorest sectors of a society. History has
shown that this does not actually happen. Economic growth does
not benefit all members of a society equally but rather increases
the wealth of the richest while increasing the poverty of the
the percentage of a country's labour force (those people who
are working or looking for work) that does not have work.
a market with few government regulations and interventions controlling
it. An unregulated market would not have price controls and
would encourage total freedom of movement for capital, goods
UN System of National Accounts - an international system of
accounting that displays a country's economic activities, in
other words, those activities that involve monetary transactions.
what something or someone is worth. In terms of economics, value
is judged solely by monetary value, what something or someone
is worth in money.
what an individual receives, usually in the form of money, for
providing a service.
This glossary has borrowed heavily from a number of sources
including: CCPA's Show us the Money: The Politics and Process
of Alternative Budgets, Marilyn Waring's Counting for
Nothing, and the Canadian
Department of Finance.
If you would like to play a game with
these terms visit the Quiz.
For information on terms relating to Trade
and Globalization, see A Basic
Banking & Debt