Economics 1022A/B Chapter Notes - Chapter 30: Business Cycle, Canadian Dollar, Monetary Base

• School: Western University
• Department: Economics
• Course: Economics 1022A/B
• Professor: Emilie Rivers

Document Summary

Independent central bank determined monetary policy with no government interference (looks after long term goals) Subordinate central bank must follow government directions, but can still have significant power (i. e. bank of canada) government needs something that has democratic control over . For example, parent is government and children is the boc. Goal is to protect value of canadian money. Involves the bank of canada changing interest rates to control inflation and stabilize the economy ( smooth out the business cycle ) Maintain the inflation between 1 and 3 percent per year as measured by the consumer price index. Inflation rate targeting a monetary strategy in which the central bank commits to an explicit inflation target and to explain how its actions will achieve such target. The government of canada and the bank of canada jointly agree on the monetary policy target. However, the bank"s governing council is responsible for conducting of the monetary policy.