Campbell R. McConnell,
University of Nebraska, Lincoln
Stanley L. Brue,
Pacific Lutheran University
Thomas P. Barbiero,
Ryerson University
| Asset demand for money | The amount of money people want to hold as a store of value; this amount varies inversely with the rate of interest.
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| Bank rate | The interest rate that the Bank of Canada charges on advances (normally very shortterm loans) made to the chartered banks.
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| Government deposit switching | Action of Bank of Canada to increase (decrease) backing for money supply by switching government deposits from (to) itself to (from) the chartered banks.
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| Monetary policy | A central bank's changing of the money supply to influence interest rates and assist the economy in achieving a full-employment, non-inflationary level of total output.
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| Money market | The market in which the demand for and the supply of money determine the interest rate (or the level of interest rates) in the economy.
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| Open-market operations | The buying and selling of Canadian government securities by the Bank of Canada for purposes of carrying out monetary policy.
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| Sale and repurchase agreement (SRA) | A transaction in which the Government of Canada offers to sell securities to designated counterparties with an agreement to buy them back at a predetermined price the next business day.
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| Special purchase and resale agreement (SPRA) | A transaction in which the Bank of Canada offers to purchase Government of Canada securities with an agreement to sell them back at a predetermined price the next business day.
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| Total demand for money | The sum of the transactions demand for money and the asset demand for money.
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| Transactions demand for money | The amount of money people want to hold for use as a medium of exchange (to make payments), and which varies directly with the nominal GDP.
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| Velocity of money | The number of times per year the average dollar in the money supply is spent for final goods and services; nominal GDP divided by the money supply.
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2002 McGraw-Hill Higher Education