Unit 1.2

Question 1

Economic Systems

Answer 1

A set of laws that help a nation determine how to use its scarce resources to satisfy as many people’s needs and wants as possible.

Question 2

3 Economic Systems

Answer 2

Traditional
2. Command
3. Market (Free Enterprise)
4. Mixed Market

Question 3

Traditional Economic Systems

Answer 3

A traditional economy is a system that relies on customs, history, and time-honored beliefs. Tradition guides economic decisions such as production and distribution. Societies with traditional economies depend on agriculture, fishing, hunting, gathering, or some combination of them

Question 4

Free Market Economic System (capitalism)

Answer 4

The free market is an economic system based on supply and demand with little or no government control.

Question 4

Command Economic Systems (communism)

Answer 4

A command economy is a system in which a central government makes all economic decisions. Either the government or a collective owns the land and the means of production.

Question 5

Mixed Market Economic System

Answer 5

Mixed features both traditional and command features. Both private and public ownership of resources (Rogers vs. Health Care System)
Represents a welfare economy (EI, CPP)
* Has a large underground economy

Question 6

Political Systems

Answer 6

Democracy (everyone is free to vote), Monarchy, Dictatorship (one person rules over everyone)

Question 7

Political Models

Answer 7

There are four political models
1. Communism
* Calls for government or community ownership of all means of production and wealth.
2. Socialism
* Allow for fair and equal distribution of available goods and services through a democratic decision-making process
3. Capitalism
* Maintain public order and keep competition free and
fair
4. Fascism
* Use force as a means of political and social control

Question 8

Setting Economic Goals

Answer 8

Every economic system attempts to establish economic goals as targets to focus the use of productive resources

• Goals may be complementary (reaching one goal makes another goal easier to achieve) or conflicting (reaching one goal makes another goal more difficult to achieve)

Question 9

Complimentary Goals

Answer 9

Reaching one goal makes another goal easier to
achieve.

Question 10

Conflicting Goals

Answer 10

Reaching one goal makes another goal
more difficult to achieve

Question 11

Political Stability

Answer 11

Can help long-term planning and long-term investment. Political uncertainty hurts a country’s economy

Question 12

Reduced Public Debt

Answer 12

Government spending increasing at a
faster rate than revenues (taxes)

Question 13

Economic Growth

Answer 13

○ an increase in the total productive output of an
economy (outward shift of the PPC)

Question 14

Increased Productivity & Efficiency

Answer 14

Maximized productivity

scarce productive resources are put to efficient use in
order to get as much as possible from them to
compete in global markets

production processes must become more efficient

Question 15

Equitable Distribution of Income

Answer 15

dividing up the total national income. Transfer payments - take revenues from one region and redistribute to another

Question 16

Price Stability

Answer 16

Stable prices indicate a healthy economy
○ periods of inflation erode the purchasing power of
the dollar and raise the cost of living for Canadians
living on fixed incomes

Question 17

Full Employment

Answer 17

in an attempt to reach optimum production targets,
governments try to promote full employment of the labor
force. an unemployed labor force also represents a waste of
human potential and can cause serious hardship for
unemployed workers and their families. Long periods of high unemployment indicate a country’s poor economic health. As more and more technology is developed it becomes more and more difficult for Canada to maintain full employment

Question 18

Viable Balance of Payments & Stable Currency

Answer 18

in a global economy, an international flow of goods
and currency in transactions such as importing, exporting, borrowing, and lending has become increasingly important. Imports > Exports = negative effect on employment rates in Canada.

Question 19

Economic Freedom

Answer 19

the freedom of choice available to workers,
consumers and investors in the economy in a market economy, consumers are free to purchase goods and services of their choice Consumers through their purchasing decisions can determine what goods and services are produced

Question 20

Environmental Stewardship

Answer 20

economic activity must be carried out without significantly harming the natural environment. If we want to protect the planet, we have to adjust the way we carry out our economic activities. this could mean potentially higher prices for consumers and lower profits for producers, but the negative effects on the environment must be reduced. if Canadian environmental laws become too restrictive then Canadian goods become less competitive in the world markets

Question 21

Sustainable Development

Answer 21

Economic growth that meets our present needs while preserving
the ability to meet the needs of future generations.