Issues for Canadians: Economic Systems in Canada and
the United States
Economic Systems and Quality of Life
Definitions: Match the following terms with
their definitions. Place the according letter
beside each word.
 Factors of Production
 A resource is anything that can be used to create goods or services. Every society
has 3 basic kinds of resources land, labour, and capital.
 Land includes all the natural resources found in and on the land, such as forests
and mineral deposits. The value of these natural gifts depends on their usefulness
and their scarcity. (e.g.: gold is a precious metal only because it is hard to find, and
is very useful; sand is also very useful but is also easy to find, therefore it has a
lower value.) It consists of both non-renewable and renewable resources.
 Labour consists of the human effort that goes into producing a good or a service. It
includes physical and mental effort need to produce goods or services.
 Capital is money used to produce goods and services. It includes the money needed
to pay for labour and the equipment used in the production of goods. Capital is
created through the accumulation of wealth.
 Economists call land, labour, and capital factors of production. Factors of
production are often called the inputs, while the goods and services produced are
called outputs.
 Goods used in the production of other goods are called Capital Goods.
 While watching the video “Scarcity” makes some notes…
 http://www.dailymotion.com/video/x871lj_real-world-economics-what-isscarci_school
What is an Economic System? Pages
204
 In order for the resources of a society to be shared among the people, there
must be some form of organization. This sharing helps resolve the issues
experienced with scarcity. 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.
 PLANNED ECONOMY
 In the planned economy the economic questions are answered by a central
authority (the government). The government makes all of the decisions about
the economy. Historically, it has been an absolute monarch, a dictator, or an
elite group for example the former USSR (Russia).
 Characteristics include:
 • Resources are publicly owned.
 • Government makes decisions on how to use resources.
 • Individual consumers have little influence on economic decision making.
 MIXED ECONOMY
 A mixed economy combines private ownership and government
control. For example, private businesses own some resources and
the government owns others. In mixed economies, the level of
government involvement fluctuates depending what political party is
in power.
 Characteristics include:
 • Some resources are publicly owned and some are privately owned.
 • Individuals and government both make decisions about what to
produce.
 • Individual consumers and government influence economic decision
making.
 MARKET ECONOMY
 A market economy is a system where the collective economic
decisions of the individual buyers and sellers shape the economy of
the whole society. In this system, buyers establish demands that
sellers attempt to meet.
 Through give and take, buyers and sellers both meet their needs
as best they can. The government does not get involved. The
economy is run on the basis of the individual decisions made by
buyers and sellers.
 Characteristics include:
 • Resources are privately owned.
 • Individuals make decisions on how to use resources.
 • Individual consumers drive economic decision making by
choosing what to buy.
 Remember that societies are forced to create economies because
they cannot have everything they want. Resources are limited,
and they must be shared among the people of the society.
Therefore the basic rule of economics is:
 The basic rule of economics is that you cannot have everything!
 Economic Models Explained with Cows:
 SOCIALISM You have 2 cows. You give one to your neighbor.
 COMMUNISM You have 2 cows. The State takes both and gives you some
milk.
 Mixed Economy You have 2 cows. The State regulates the production of
milk, asks for some taxes from the owner, you are able to buy and/or sell the
milk, but must pay more taxes on the processed milk.
 NAZISM (FASCISM) You have 2 cows. The State takes both and shoots you.
 BUREAUCRATISM You have 2 cows. The State takes both, shoots one, milks
the other, and then
 throws the milk away...
 TRADITIONAL CAPITALISM You have two cows. You sell one and buy a bull.
Your herd multiplies, and the economy grows. You sell them and retire on
the income.
 What’s an Economic System? Pages 204 – 208
 In your own words, what is an economic system?
 THE ECONOMIC CONTINUUM
Planned Economy
Mixed Economy
Market Economy
Characteristics:
Characteristics:
-
Characteristics:
Canadian Economic History versus
U.S.A. Economic History
 “THE PUBLIC GOOD”
 What does this mean?
 Compare how Canada & the USA differ in their views
about “the public good”.
 CANADA: COOPERATION
 USA: INDIVIDUALISM
 Why do you think we have answered the question
differently at different points in our histories?
Canadian Economy
US Economy
Founding Principles
Founding Principles
Values:
Values:
Canada
USA
Shift Left
Shift Right
Shift Right
Shift Left
 CROWN CORPORATIONS
 Why does Canada have crown corporations?
 Identify two crown corporations the government has sold to private
enterprises.
 Why do you think they sold these?
 Identify two crown corporations the government still owns.
 What connection is there between collective rights and crown
corporations?
 What connection is there between identity and crown corporations?
SUPPLY & DEMAND: How do
market economies work?
Use the information on pages
209-211 to help you fill out this
information.
Questions Pages 212-215
 What is Competition? (1 mark)
 How can competition affect the variety and price of products available
to you? How might this affect your quality of life? (2 marks)
 What are two examples of competition given in your text book? Can
you come up with a third? (3 marks)
 What is a monopoly and why do governments sometimes want to
prevent them? Can you give a Canadian example? (3 marks)
 What is the Competition Act? (2 marks)
 What are the 5 reasons why a government may get involved in the
running of a market economy? (5 marks)
As a class discuss the following
cartoon.