1. Social Studies 9

2.  Unit 6 introduces the second topic of the course: Economic Systems in Canada and the United States. The unit explores: ◦ The basic problem of scarcity that faces any economic system ◦ Examples of and values underlying the three main economic systems ◦ The features of the Canadian and American economies ◦ Mechanisms of control in mixed and market economies ◦ The impact of economic systems on individuals and groups within society

3.  The basic problem of scarcity—the fact that there is a limited supply of resources on the planet and an unlimited supply of human wants—creates problems for any social or economic system. Scarcity forces individuals to make decisions about: ◦ What goods and services to produce ◦ How to produce goods and services ◦ Who will receive these goods and services  These questions do not differ group-to-group. However, the responses do—the pattern formed by a group’s responses determines to what extent the group is a planned, mixed, or market economy.

4.  Scarcity is created by a shortage of resources. The three main categories of resources are ◦ Land (including natural resources) ◦ Labour (human resources) ◦ Capital (wealth and money)  Although there are several different resources in the world that are renewable (capable of replenishing themselves), the actions of humans limit this renewability.

5.  Planned Economy ◦ High degree of government planning, property ownership, and regulation. Decisions about the questions of scarcity are made by the government with the interests of citizens in mind.  Mixed Economy ◦ Some government planning, national ownership of industry, and economic regulation. Individual citizens and corporations are still allowed some economic freedom, but the government intervenes in the economy to protect the well-being of citizens and/or the environment.  Market Economy ◦ High degree of individual choice and opportunity in the economy. Individuals make decisions about the basic questions of scarcity, and fail or succeed based on these decisions. The government takes a laissez-faire (“hands-off”) approach to the economy.

6.  In a market economy, the market is controlled by two main principles: ◦ The relationship between supply, demand, and price  These three factors are all linked to one another—as one rises or falls, this causes another to rise or fall in turn. The relationship is linked and circular—for more specifics on the relationship, see your notes or the diagram on p. 210-211. ◦ Competition  When a number of different producers exist in a marketplace, they must compete for a share of the profits to be had in that market. The choices these producers make about what goods to produce and how to produce them determines how successful they will be.

7.  In a mixed economy, the market is still controlled by the mechanisms of a market economy (S+D+P, Competition), but also by the government or a central planning authority. In some cases, the government may allow or encourage a monopoly to exist—this occurs when a single producer or corporation has complete control over a given market or resource.  A government in a mixed economy may also intervene through regulation, planning, and/or taxation—in order to protect its citizens, the environment, or the market itself.

8.  National economies often experience “shifts” along the economic spectrum—often in response to current events, political changes, the international market, or environmental issues. ◦ Shifts to the left—demonstrated by increased personal and corporate taxes, increased government spending, higher degrees of public ownership of industry and property, environmental regulation, and central planning ◦ Shifts to the right—demonstrated by decreased levels of taxation, deregulation of the economy, lower interest rates on loans to encourage entrepreneurship, less overall government involvement

9.  The decisions that nations make about placement (and movement) along an economic spectrum are influenced by their beliefs and values about how best to maintain the common good—what is best for all of society: ◦ Supporters of a market economy maintain that encouraging self-interest and freedom is the best way of achieving the common good, and will benefit most those groups who deserve and earn success ◦ Supporters of a planned or mixed economy argue that the government needs to take a more direct role to support the common good by protecting the less able or successful members of society

10.  Collective bargaining  Competition  Consumer  Economic system  Economics  Economy  Labour union  Privately owned  Producers  Public good  Publicly owned  Scarcity  Shift left, shift right  Strike  Supply, demand, price  Unemployment rate