This chapter reviewed the role of the government as it affects the economy. You will recall that the Bank of Canada was described as a very important institution created by the federal government. Nevertheless, it operates as an independent body with a board appointed by the government. The current Governor of the Bank of Canada is David Dodge.

The Bank has important responsibilities and the way it carries them out has a huge effect on the Canadian economy and on individual businesses. This video shows David Dodge wrestling with the issue of assessing the condition of the economy so that he can take the proper steps to help keep it in good shape. Normally, the Governor of the Bank would base his decisions on information and statistics from various sources. In the video, the former Minister of Finance comments that it takes too long to get that data. He states that an effective action to counter an economy sliding into a recession requires a quick reaction based on current information and on instinct.

You will see that it is not an easy job but we are fortunate to have David Dodge in charge. He is an economist with many years of experience as Deputy Minister of Finance, and he doesn't lose his cool easily. When necessary, he is decisive and he takes unprecedented actions. During 2001, he lowered interest rates 8 times, to the lowest levels in 40 years, in the attempt to boost a faltering economy.

A password is required to view the video listed below. Refer to page 355 in your textbook and use the first word appearing in the main text column as both 'username' and 'password' (case-sensitive).

Bank of Canada - David Dodge

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1			In recent decades a strong movement, led by many business organizations, urged the privatization of Crown corporations and less government involvement in the economy. However, the chapter notes that when the economy weakened many voices were heard demanding that the government do something. What do you think of this apparent contradiction? Should governments limit their role to crisis intervention?
2			The video mentions the unpopularity of the previous Governor of the Bank of Canada; he raised interest rates to unprecedented levels in his lengthy battle against inflation. His unpopularity resulted from the high unemployment his policy produced. The textbook notes that the federal government’s more recent policy of reducing the large national debt also led to more unemployment and social hardship. This made it unpopular. Do you think that governments should do what they think is right and not worry about being popular? Why?
3			The textbook examines the wide variety ofways in which the laws, regulations, andactions of all levels of government affectbusinesses and the economy in Canada. Isthere any area where you think that thisintervention should be reduced? How wouldyou justify your opinion?