SS9 ECONOMICS 101 –
The Short Version
Student Notes…Pay Attention!
I need new pom-poms!
Meet the Normal
Family:
I want a new snowboard!
Don’t these kids know that
money doesn’t grow on
trees?!
This family has an
ECONOMIC PROBLEM!
WHY?
3 Types of Resources
• NATURAL RESOURCES: soil, fish, minerals, etc.
• HUMAN RESOURCES: people and their skills
and knowledge
• CAPITAL RESOURCES: money
or anything that can be used
as collateral to get money
(property, rare metals, etc.)
RESOURCES are known as FACTORS OF PRODUCTION
(FOP) in ECONOMICS
(meaning you need all three in order to produce goods
and services)
NATURAL RESOURCES = LAND
HUMAN RESOURCES = LABOUR
CAPITAL RESOURCES = CAPITAL
LAND + LABOUR + CAPITAL = FOP
A LIMITED SUPPLY of any RESOURCE (or FOP) is
called SCARCITY.
EVERY society deals with SCARCITY. The way a
society deals with scarcity defines its
ECONOMIC SYSTEM.
Other Words for Scarcity?
•
•
•
•
•
•
•
Shortage
Deficit
Shortfall
Decreased Amount
Rare
Few
Limited
The 3 Basic Economic Questions (3BEQs)
(how a society attempts to deal with scarcity)
• What is needed or wanted?
• How will it be produced?
• Who will get it?
How these questions are answered determines a
country’s economic system. Sometimes the
government makes the decisions, sometimes it
doesn’t. For example:
The Economic Continuum
Left
Center
Communist
Right
Capitalist
Socialist
Centrally Planned
Market
Mixed
Totalitarian
Free Enterprise
Modified Market
Planned
Laissez Faire
Left (Planned)
• gov’t answers 3BEQs
• gov’t owns and manages FOP
• gov’t plans what will be
produced
• gov’t decides how to use
resources
• individuals have little
influence on gov’t decisions
• consumers have no say in
economy
Centre (Mixed)
• combines private ownership and gov’t control to
answer 3BEQs
• private businesses own and manages some FOP
• gov’t owns and manages some FOP (CROWN
CORPORATIONS)
• gov’t control of economy varies depending on
who is in power
• consumers have some say in economy
Right (Market)
•
•
•
•
•
private business and consumers answer 3BEQ
private businesses own and manage FOP
consumers determine what is needed or wanted
producers meet consumer demand
business succeeds if they produce what
consumers want
• no gov’t involvement in business
ECONOMIC SYSTEMS can SHIFT LEFT or SHIFT
RIGHT depending on social and political factors
affecting the economy, such as VALUES,
STANDARD OF LIVING and QUALITY OF LIFE.
What do Economic Systems Value?
• The PUBLIC GOOD is about what’s BEST for
society as a WHOLE. Governments differ on
how to achieve it.
• COOPERATION: set aside individual interests
to meet the needs of the group; recognizes
needs and circumstances; values EQUITY
• INDIVIDUALISM: what’s best for individuals
will add up to what’s best for society; values
creativity and INDEPENDENCE.
There are extremes at either end of the continuum.
Can you think of some examples of other countries we
can place on the continuum?
Shanghai China
Mexico
Russia
Britain
North Korea
LET’S COMPARE:
CANADA’S ECONOMY
“Peace, order, and good government”
• reflects idea of cooperation
• gov’t makes economic decisions on behalf of citizens
• MIXED because citizens, business and gov’t make economic
decisions
• Gov’t operates Crown Corporations when it is in the public
interest to do so because:
– it’s too expensive for private business to operate, or,
– the population is too small for the business to be profitable for
an individual or company
LET’S COMPARE: cont.
USA’S ECONOMY
“life, liberty, and the pursuit of happiness”
• spirit of individualism based on history of independence
• values individual economic decision-making; gov’t does not
like to intervene
• market forces determine economy
• works through forces of competition and the idea of supply
and demand
• federal gov’t only controls necessary services (some social
supports, postal service, some healthcare
CANADA’S ECONOMY
“Peace, order, and good government”
SHIFT LEFT
• universal healthcare
• Canada Pension Plan for seniors
• establish Crown Corporations Air Canada, CBC,
Via Rail, Canada Post, AGT
CANADA’S ECONOMY
“Peace, order, and good government”
SHIFT RIGHT
• cuts in gov’t spending
• privatize crown corporations (Air Canada, Via
Rail, AGT=Telus)
• NAFTA increases influence of market in
economy
USA’S ECONOMY
“life, liberty, and the pursuit of happiness”
SHIFT LEFT
• Old Age Security for seniors
• Farm support (subsidies)
• Public works projects (roads, dams, bridges…)
• USPS
USA’S ECONOMY
“life, liberty, and the pursuit of happiness”
SHIFT RIGHT
• reduced gov’t spending
• reduced regulations/rules on trade
What are some of the things people living in either
country might value in terms of STANDARD OF LIVING
and QUALITY OF LIFE? Let’s make a comparison:
What could be considered NEEDS? WANTS?
Coming up next:
• What is the relationship between SCARCITY
and SUPPLY and DEMAND?
• What role does COMPETITION play in an
economic system? What is the relationship
between SCARCITY and COMPETITION?