Download Economic Systems - Swan Hills School

Social Studies 9
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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
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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
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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.
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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)
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Although there are several different resources
in the world that are renewable (capable of
replenishing themselves), the actions of
humans limit this renewability.
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Planned Economy
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Mixed Economy
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Market 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.
◦ 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.
◦ 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.
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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.
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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.

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
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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
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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