1920s & 1930S

Laissez faire

French for 'let do'; governments allow the economy to operate without interference.

Revenue

Money received, primarily from taxes and customs duties.

Expenditures

Money spent by the government.

Budget

A government’s spending plan, indicating expenditure priorities.

Balanced budget

When revenues equal expenditures; expected pre-Great Depression.

Deficit financing

Intentionally going into debt to stimulate long-term economic growth.

Currency

The money used in a country.

Capitalism

The rich get richer, and the poor get poorer; involves finite or infinite supply.

Market economy

Prices determined by the agreement between suppliers and buyers.

Supply and demand

Pricing structure based on product availability and consumer desire; high supply = low demand and vice versa.

The business cycle

Cycles of prosperity and recession in market economies every five to six years.

Overproduction

Industrial capacity exceeded consumer demand.

Reliance on exporting staples

Dependence on a few products; drought impacted the economy.

Dependence on U.S.

40% of Canadian exports to the U.S. meant reliance on their markets.

Stock market crash

A rush to sell stocks led to rapid decline in prices.

Economic protectionism

Increased protective tariffs in the 1920s led to a loss of Canadian export markets.

International debt after WW1

U.S. loans to foreign nations went unpaid when they turned protectionist.

John Maynard Keynes

Suggested government should spend to recover from the Depression through deficit financing; many ignored these ideas.

Franklin Roosevelt

Called Keynes a 'fool'; introduced the New Deal, which included many of Keynes’s ideas.

R.B. Bennett

Introduced a Canadian version of the New Deal including progressive taxation, minimum wage, and unemployment insurance, but was seen as too late.

The King-Byng Crisis (1926)

King, supported by the Progressive Party, faced a loss of support and refused Byng's request to resign; the first time a Governor General denied a Prime Minister's request to dissolve Parliament.