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Canada
Economics
SS6E1a,b,c; SS6E5; SS6E8
What to produce?
How to produce?
For whom to produce?
Economic Systems
• Traditional: people usually produce what
they need to survive; usually in an
agricultural society; They trade/barter
goods
• Command: government CONTROLS
what is produced and how it is produced
• Market: based on what the country’s
people want to buy and sell; allows for
private ownership of businesses and
entrepreneurs
Mixed Economies
• Today, most countries are a mixed
economy – each has some government
control (command) and some consumer
control (market).
• On the economics continuum – some
mixed economies are more market and
less command (Canada); while others are
more command and less market (Cuba).
Market
Command
Canada has a mixed economy (more market, very little
command). The government controls areas such as
health care and the postal service.
Specialization (SS6E2)
• Specialization encourages and increases
trade; a country can obtain (get) what it
needs at a lower cost when it is produced
by the country who specializes in
producing that item.
• Countries will specialize in what they do
best (examples: oil production, cars, blue
jeans)
Opportunity Cost
• When a country decides to specialize, they
have to consider opportunity cost.
• Definition of opportunity cost: when a
country specializes, it is the value of what
they give up when choices are made
about what product(s) in which to
specialize.
• Canada specializes in paper products that
they sell to the USA.
Trade Barriers (restricting trade because a
country wants to sell and produce their own
goods) These can be natural geographic
features such as mountains or oceans, or they
can be man-made/political ( tariffs).
• tariffs: TAXES placed on imported goods
• quotas: RESTRICTIONS on the amount of goods that
can be imported into a country
• trade embargoes: FORBID trade with another country
• Trade Corridors allows trade to flow freely
between countries. This can be a treaty to
remove tariffs (NAFTA) or a man-made
system such as the St. Lawrence Seaway.
NAFTA (North American Free
Trade Agreement)
• In order to increase trade in North
America, the USA, Canada, and Mexico
signed an agreement called NAFTA.
• NAFTA created a free trade zone in North
America.
• This agreement eliminated (removed)
tariffs on goods shipped between the USA,
Canada, and Mexico.
NAFTA: USA, Canada, Mexico
Exchanging Currencies (money)
• All countries do not use the same type of
currency (money).
• International trade must have a system for
exchanging currencies between countries.
Foreign exchange: In order to pay for
goods in another country, you must
convert your currency (money) into the
currency of another country. (example:
USA dollar to Mexican peso)
Economic Growth Factors
• Factors that influence economic growth
are:
– human capital = human workers and the
investments in the welfare (healthcare) and
training of those people who perform labor
(work) Education
– Capital = (factories and/or machinery)
– Natural resources = things that come from
the land (examples: minerals, water, trees, oil)
– Entrepreneurship = people who are willing to
take a risk to own a private business
Gross Domestic Product (GDP)
• GDP = total market value of the services
and goods that a country produces during
a specific year
• A country’s economic “health” is
determined by the GDP (in other
words…how rich or poor is the country?)
• Countries with a strong economy = high
GDP; weak economy = low GDP
Relationship between investment in human
capital (education and training) & investment in
capital (factories, machinery, & technology)
and GDP (Gross Domestic Product).
• Human Capital: Investment in skills training
(improve your job skills) and education directly
affects a country’s GDP; healthy employees are
more productive…make more money…raise
GDP).
• Capital: goods used to produce things
(factories, machinery, computers, technology,
etc.); provides workers with the best and newest
tools so they can produce more (make more
money for the country’s economy…raise GDP).
Entrepreneurs
• Entrepreneurs are extremely important to
any country’s economy. Remember…they
are people who have new ideas and they
risk their own money to create a business
and bring the goods/services to the
marketplace.
• Once their goods/services are brought to
the consumer…they are making
money…and raising the country’s GDP!!