issues for canadian textbook chapter 6 : To what extent do different economic systems affect quality of life?
Imagine that you are in charge of all the income for your home each month. What factors will you consider in deciding how the money will be spent? Maybe there isn’t enough money to get what everyone needs to support the quality of life they want.
Most likely, each person in your home will have their own views on how to spend the money — and that will create issues that you will need to explore and debate.
issues for canadian textbook chapter 6
Economics is about decisions like that. It’s about what to create, grow, eat, sell and buy, and how to respond to the different needs of people in society. It affects the incomes people make, the jobs they have, and the taxes they pay to the government.
- What values shape the mixed and market economies of Canada and the United States?
- How do economic decisions about scarcity, supply and demand, and competition affect individuals and groups?
Some things people need are unlimited. For example, people need air. Air is usually freely available, unless — for example — you happen to be scuba diving.
Most things that people need or want, however, are limited. This is because resources are limited. In economics, resources include the money, labour, and materials to supply what people want and need.
Resources can be limited for a number of reasons. For example, think of things you buy at the grocery store, like fresh berries. Many factors can limit the supply of fresh berries — for example, the growing season in Canada and trade agreements with other parts of the world.
What creates scarcity?
Land: Land consists of all the materials found in the natural environment needed to produce goods and services, such as renewable resources (e.g., trees, raspberries) and non-renewable resources (e.g., oil, gold). Think critically: What impacts might this decision about using the land have on the land?
Labour: Labour consists of the physical and mental effort needed to produce goods and services (e.g., agricultural workers to produce foods, servers to staff restaurants). In this photo, construction workers are building a house. If they find other jobs, or if there aren’t many qualified construction workers available, fewer houses will get built. Think critically: How do choices concerning jobs affect the workforce?
Capital: Consists of the money that people own or borrow, used to purchase equipment, tools and other resources to produce goods and services. This photo shows an airplane manufacturing plant. Setting up such a plant requires billions of dollars in specialized equipment and specialized workers.
What’s an economic system?
An economic system is a way to solve the basic problem of scarcity. Different ideas about how best to organize an economy result in different economic systems. You can put them on a continuum, like the one below. An economic system’s position on the continuum is dynamic, and depends on the underlying values of a society and its government. The positions of Canada and the U.S. on the continuum below reflect a traditional perspective on differences between their economies. Their actual positions on the continuum shift right and left, depending on the political party in power.
- 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 that established Canada.
- 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. It shifts left and shifts right depending on the political party that forms the government.
What’s a Crown corporation?
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:
- To provide essential services.
- To promote economic development.
- To support Canadian culture and identity.
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. Here are some examples of Crown corporations from Canada’s past and present.
The U.S. Economy
- Founding principle: “life, liberty and the pursuit of happiness.”
- The founding principle of the U.S. 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 involvement of the government.
- 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 decision making.
- The position of the U.S. on the economic continuum shifts right and left, depending on the political party that forms the government.
How do market economies work?
Mixed and market economies are different, but related, economic systems. In both systems, the individual choices of consumers are an important economic force. They add up to create overall economic decisions for society. In pure market economies, consumer choices drive all economic decision making.
Supply and Demand
- The diagrams on this page illustrate the basic principles of supply and demand.
- Supply and demand connect through a cause-and-effect relationship related to price. Each diagram shows an example of this relationship and describes how it affects the economy.
- Supply and demand affect quality of life because they affect the prices of products we buy, the availability of products, and jobs connected to creating products.
- Supply is about producing things people want. It involves producers.
- Demand is about what people want. It involves consumers.
Competition is about producers striving to get consumers to buy their products. Producers attract consumers in a variety of ways — through different prices and product quality, for example. Many factors can affect competition in an economic system, including the
values of consumers and decisions by government to become involved in decisions about supply and demand.
Why do governments get involved in market economics?
Market economics relies on the decisions of individual consumers and producers. Sometimes governments get involved to inform, protect or ensure good practices. They may intervene if they feel consumers are not being fairly treated. For example, the B.C. government started its own auto insurance program because it believed private insurers were making auto insurance too expensive.
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