Income Management What is Money? What is Income? Personal Money Management Business Money Management

Income Management

What is Money?What is Income?

Personal Money ManagementBusiness Money Management

What is Money?

• Under federal law, money is legal tender that must be accepted as payment for goods and services.

• Coins

• Bank of Canada

Notes (bills)

Coins

Minted, or manufactured, at the Royal Canadian Mint in Ottawa or the Mint’s

Winnipeg branch

The Government of Canada decides when,and if, to issue new coins.

Example: The government replaced the $1 and $2 paper notes with coins in 1987 and 1996 respectively.

Coin Fact

The Mint in Winnipeg produces 15 million coins each day. That is 750 coins per second.

Bank Notes (Bills)

Issued by the Bank of Canada

Bank of Canada does not own its own facilities to print bank notes.

Two privately owned, high-security printing companies are used.

Money’s Purchasing Power

Paper used to print our money is not worth its assigned value.

Metals used to make coins are virtually worthless.

Just a few cents of metal is used to make a toonie.

Why is money worth anything?

Purchasing Power

Purchasing Power• The amount for which one can purchase the

same good or service changes over time.

Example: A Caramilk chocolate bar was once less than 50 cents. Now it’s a little more than a dollar.

• Today, $10 purchases much less than it did 30 years ago.

Purchasing Power

Inflation

A term used to describe when prices increase over time for goods and

services.

Purchasing PowerConsumer Price Index (CPI)

It measures the purchasing power of money and is the measurement of inflation or deflation.

CPI is determined monthly by Statistics Canada.

It takes into consideration 600 products typically purchased by Canadian households and includes food, shelter, transportation, clothing, and recreation.

How much does it cost to purchase that samebasket of goods and services over time.

Inflation Calculatorhttp://www.bank-banque-canada.ca/en/rates/inflation_calc.html

Source

• Wilson, Jack et al. The World of Business, 5th Ed., Nelson Education Ltd., Canada, 2007