According to the Bank of Canada (BoC), there are “limited levels of macroeconomic literacy” regarding deficits, inflation, and central banking among the general public, which the Bank finds concerning. .“Whether in media or the political space, the public has been repeatedly confronted with contradictory messages regarding the feasibility and desirability of monetary finance,” said a Bank report What People Believe About Monetary Finance and What We Can(‘t) Do About It. .“Conveying the message to the public is particularly challenging for central banks given the perceived complexity of the topic and the possibly limited levels of macroeconomic literacy in the population.”.“What do people know about macroeconomic policies and trade-offs in public finance in general?” asked researchers. They defined macroeconomic literacy as “the ability to understand and correctly interpret information pertaining to macroeconomic policies.”.According to Blacklock’s Reporter, the BoC surveyed 8,601 households in France, Italy, and the Netherlands, but Canadian households were not included in the survey. The Bank did not provide a reason for this exclusion..“This is the first survey of people’s perceptions of public finance options and monetary finance,” said What People Believe. .Questions included:.When government expenses over a year exceed its resources, what does it entail? a) a budget surplus b) a deficit c) insolvency d) default e) decrease in public debt f) ‘other’ or ‘I don’t know’Imagine a country has accumulated so much public debt that lenders doubt if they will be repaid. What would you say can happen? a) increase in interest rates b) decrease in rates c) no impact on rates d) ‘I don’t know’Which of the following institutions usually takes monetary policy decisions: a) commercial banks b) central banks c) the finance minister d) Parliament e) ‘other’ or ‘I don’t know’.“We find an average score of 40%,” said What People Believe. .“Men score an average 10% higher than women.”.“Scores are rather low,” wrote researchers. .“Respondents only correctly answered an average of two questions out of five and fewer than 5% obtained the maximum score. This, despite respondents devoting considerable effort to these questions.”.The report comes in response to ongoing criticism from parliament towards BoC Governor Tiff Macklem. .In 2020, Macklem incorrectly predicted that inflation would “remain less than 2%” and stated that “interest rates are going to be low for a long time.”.“Did we get everything right? No,” said Macklem in 2022 testimony at the Commons Finance committee. .“We have been surprised.”.Opposition Leader Pierre Poilievre told reporters last Jan. 25 that Macklem should be fired. .“A sucker punch, that’s what the Trudeau government hit Canadians with today by increasing interest rates,” said Poilievre..“Should the Bank of Canada governor be fired?” asked a reporter. .“Of course,” replied Poilievre.
