all reminded of their importance. In this sense, the financial crisis of
2007–2008 was like a global power failure for the world economy.
The financial crisis had micro causes and macro consequences. The
challenges of appropriate regulation for financial and nonfinancial firms
are explored in Chapters 12 and 16. The market for financial capital
and the determination of interest rates are examined in Chapter 15
debates regarding the appropriate role of the government in a market
economy occur throughout the book, including in Chapters 1 , 5 ,
17 , and 18.
Globalization
Enormous changes have occurred throughout the world over the last few
decades. Flows of trade and investment between countries have risen so
dramatically that it is now common to speak of the “globalization” of the
world economy. Today it is no longer possible to study any economy
without taking into account developments in the rest of the world.
Throughout its history, Canada has been a trading nation, and our
policies relating to international trade have often been at the centre of
political debates. International trade shows up in many parts of this
textbook, but it is the exclusive focus of two chapters. Chapter 32
discusses the theory of the gains from trade; Chapter 33 explores trade
policy, with an emphasis on NAFTA and the WTO.