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Money saved by individuals can be safely deposited in financial institutions to earn interest. The financial institutions use these savings to offer loans to individuals and businesses. Investments are the driving force of economic growth and development. When the economy is booming, and borrowing and spending levels are high, large amounts of money end up in circulation, thus spurring inflation. The Bank of Canada may intervene to reduce inflationary pressures by raising interest rates in order to slow down consumption and business spending, and ease inflation. Volume 3, Program 1 of the series.

1996, 17 min 15 s

Economix - Volume 3