SS9 ECONOMICS 101 – The Short Version

Student Notes…Pay Attention! This family has an ECONOMIC PROBLEM! WHY? I need new pom-poms! I want a new snowboard! Don’t these kids know that money doesn’t grow on trees?! Meet the Normal Family:

Because WANTS are UNLIMITED and RESOURCES are LIMITED!

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 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 Right Communist Centrally Planned Totalitarian Planned Socialist Mixed Modified Market Capitalist Market Free Enterprise 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.

Shanghai China Mexico Russia Britain North Korea 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 could be considered NEEDS? WANTS? 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?