A recent bailout from the Canadian government was to Air Canada. This bailout was important as it protected both air travel, customer dollars and jobs within the aviation sector. The bailout occurred in 2021 when the economy was challenged and changed by the Covid-19 pandemic. Air travel was heavily impacted by the lockdowns within Canada and across the world. The government intervention protected jobs during a period of uncertainty. Due to the cycle of money within Canada, the bank of Canada offering bailouts and loans to large institutions increases liquidity within the system. Thus protecting the deposits made. Personally, without the recent understanding of the monetary system, it seemed counterintuitive to me to have governments bail out large institutions. It felt as though these institutions were following a separate set of rules from the rest of the small businesses follow. Without the knowledge of liquidity, the financial impact to the government seemed extensive and understanding that it was funded through tax dollars made it seem like the financial decisions made by these large institutions were actually being paid for by tax payers. Now with an understanding of liquidity and how the cycle works, it's easier to understand why these bailouts happen.

B)

As previously mentioned, the Covid-19 pandemic challenged and changed the Canadian monetary system. As a result, the Bank of Canada discontinued and created new programs. These programs were made available to smaller banks, and the use of the programs was encouraged by the government to lessen the financial burden on small businesses created by the pandemic. Not only domestic lending but international lending was discussed and programs created to ensure small business owners had what they needed to survive the loss of income during the pandemic. The rational behind making new programs available was due to the widespread impacts of Covid-19. It was impossible to forecast the impacts of the lockdowns and how long the impacts would affect businesses.

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