Chapter 6 – To What Extent do Different Economic Systems Affect Quality of Life?
Fill in the following terms:
Page 194, 198
Canada’s major economic partner is the ______
Pages 202 – 204
In economics, the ideas that land (materials), labour and capital (money) limit the supply of what people want and need is called ______. Resources are limited which affects supply and demand. Resources refers to:
money
labour
materials
There are three basic questions of economics about how to solve scarcity:
- What is needed or wanted?
- How will it be produced?
- Who will get it?
The three basic “factors of production” interact to limit the supply of what people need and want. These include land, labour and capital. Use the information on page 203 to complete your notes.
Land
Labour Capital
Page 204
An economic system is a way to solve the basic problem of scarcity. There are different economic systems. An economic system’s position on the continuum is dynamic (it changes) and depends on the underlying values of a society and its government. The economies of Canada and the U.S. reflect a traditional perspective on differences between their economies. Canada has a more mixed economy and the U.S. a more market economy. A mixed economy has more government involvement than a market economy. A planned economy has the most government involvement.
THE ECONOMIC CONTINUUM
Planned Economy Mixed Economy Market Economy
Canada United States
More government involvement Less government involvement
PLANNED ECONOMY / MIXED ECONOMY / MARKET ECONOMYThe government makes all the decisions about how to solve scarcity. It owns and manages the resources needed to produce things. It plans what will be produced and decides how to use limited resources. / Combines private ownership and government control. For example, private businesses own some resources and the gov’t owns others. In mixed economies the level of gov’t involvement changes depending what political party is in power. / The choices of individuals solve scarcity. Private businesses own and manage resources. They sell their products to consumers, who make their own decisions about what to buy. Businesses succeed if they produce what consumers want. Gov’t does not get involved.
Characteristics / Characteristics / Characteristics
Page 205 - 208
What is public good?______. .
WORLD VIEWS DIFFER ON HOW BEST TO ACHIEVE PUBLIC GOOD
The public good and cooperation Thepublic good and individualism
Individuals must set aside their What’s best for each person
individual interests to achieve what’s individually adds up to what’s
best for society. best for society.
This worldview values equity: This worldview values individual
responding to others in a way that creativity and independence.
recognizes their needs and
circumstances.
Page 206 – Canada’s Economy
THE ECONOMIC CONTINUUM
Shift LeftShift Right
--More government involvement --Less government involvement
--A more liberal position --A more conservative position
The founding principle: “peace, order and good government.”
- The founding principle of Canada reflects the idea of cooperation. It connects to an agreement between Francophones and Anglophones
- The idea of cooperation affects Canada’s economic system. For example, government plays an important role in the economy, making decisions on behalf of everyone
- Canada is said to have a mixed economy because of the role government plays, and because individuals still own private property
- Canada’s position on the economic continuum is not static (does not stay the same). It shifts from left to right depending on which political party is in government.
When did Canada experience a Shift Left?______
Who was the Prime Minister at this time?______
How did the Liberals stay in power?______
______
What changes took place in the economy?
1.______
2.______
When did Canada experience a Shift Right?______
Who was the Prime Minister at this time?______
How did Mulroney reduce government involvement in the economy?
1.______
2.______
______
3.______
______
Review: What is the main difference between a shift left and a shiftright?
______
Looking at the Shift Left economic decisions and the Shift Right economic decisions, what might be some perspective on these decisions?
______
Page 207 – Crown Corporations
A Crown corporation is a company owned by Canada’s government to provide products and services to Canadians. The reasons for government to create Crown corporations include:
1.______
2.______
3.______
Economists say Canada has a mixed economy partly because of its Crown corporations. The United States also has some publicly owned corporations, but not as many as Canada.
1. How has ownership of PETRO-CANADA changed?______
______
2. Why might have the government sold Air Canada to private investors in 1988?_____
______
3. Why was CBC/Radio-Canada created?______
______
4. What is the connection between CBC/Radio-Canada and collective rights in Canada?______
What is the connection to identity?______
______
Page 208 – The U.S. Economy
What is the founding principle of the U.S. economy?______
______
- The founding principle reflects the idea of individualism. It connects to the roots of the U.S. as a colony of Britain from the 1600s until 1776, and in fighting to become independent of Britain from 1776 to 1783
- The idea of individualism influences the economic system of the U.S. For example, the U.S. generally values individual economic decision making, with little government involvement
- The U.S. is often said to have a market economy, because of its emphasis on the role of the individual, versus the government, in economic decisions
- The position of the U.S. on the economic continuum shifts right and left, depending on the political party in power.
1933 – 1944: An Example of a Shift Left
______became president of the United States in ______, during a worldwide economic crisis called the ______
______. Millions of people were out of work, the president responded with a policy called the ______. It established:
1.______
2.______
3.______
______
1980 – 1988: An Example of a Shift Right
In ______, ______became the president of the United States. Like Prime Minister ______, he wanted the government less involved in the economy. He took such steps as:
1.______
2.______
The two political parties in the United States are the ______and
the ______.
How do Market Economies Work?
A consumer is______
Page 210 – Supply and Demand
How do consumer choices “add up” in mixed and market economies? The two principles of a market economy are supply and demand and competition. Supply and demand connect through a cause-and-effect relationship related to price. Supply and demand affect quality of life because they affect the prices of products we buy, the availability of products, and jobs connected to created products. Supply is about producing things people want – it involves producers. Demand is about what people want. It involves consumers.
TERMS
Supply:
Demand:
Producers:
Consumers demandProducers supply
Competition:
Equilibrium:
Fill in the blanks using the charts on page 210 and 211.
- In a state of______, the supply of a product can meet the demand for a product at a particular price.
- When ______for a product goes up, it means more and more ______are buying the product. As ______
buy the product, the ______or availability of the product ______. If consumers are competing for the limited supply of a product, the price will ______.
- If the price goes up, what happens to demand for the product?______
______
This drives down demand for the product. When demand goes down, what happens to the supply availability?______
______
- Supply goes up so more of the product is available. If there are more products available than what consumers want to buy, ______cut prices
to encourage ______to buy more. The lower price encourages consumers to buy more, so ______for the product goes______.
This helps restore______. Producers want to supply as much of a product as consumers will buy, at a price that allows producers to make the most profit possible. This tends to make supply, demand and price stable over time.