Business Terms
What is inflation?
A decline in the value of money.
Who does inflation affect?
Everyone! The high inflation rate directly impacts Canadians, especially consumers who experience a decline in their purchasing power as prices rise.
Name a short-term effect
High inflation immediately diminishes Canadians' purchasing power, causing everyday essentials to become more expensive.
How much money an individual or entity makes after adjusting for inflation.
Real income.
What is CPI?
Used to measure inflation rates (consumer price index).
Name at least 2 factors causing inflation
1. Gasoline prices
2. Computer chip shortage affecting the auto industry
3. Increased housing costs
4. High consumer demand post-pandemic
Name a long-term effect
It could take until mid-2025 to bring inflation back to its 2% target, impacting long-term savings and investments.
What are some impacts on saving?
Inflation can erode the real value of savings and investments. People may need to save more or seek higher returns to maintain their purchasing power.
What causes inflation?
Inflation can be caused by various factors.
When did the inflation spike occur?
August 2023
What are some risks OR benefits?
Risks: Encompass increased living costs. Benefits: The economy cooling down as inflation is curbed.
High and unpredictable inflation rates can create what kind of economic environment, making it challenging for businesses and consumers to plan for the future?
Economic uncertainty.
What 2 entities were mentioned doing something about inflation?
1. Bank of Canada
2. Policy Makers
What type of concern is this?
National concern.
What is an ethical impact relating to inflation?
Geopolitical events contributing to inflation can raise ethical concerns.
To combat high inflation, what measure might central banks take, which can influence borrowing costs and investment decisions?
Raise interest rates.
What was the new inflation rate in Canada in August of 2023
4%
What is the Bank of Canada doing to combat inflation?
Bank of Canada is actively raising interest rates to control economic growth and bring inflation back to its 2 percent target.
What will happen next?
Future changes may involve shifts in government policies and interventions.
A report from where talked about the effects on individuals and the economy?
From the Bank of Canada.