Week 5 Flashcards
What does the private sector provide?
High quality living standards, effective and efficient production of goods and services
The private sector can sometimes mislead consumers, exploit employees, monopolize markets, and pollute the environment.
What is the Laissez-Faire philosophy?
The belief that government intervention in the economy is neither necessary nor beneficial for public interest
What is the role of government in a mixed economic system?
To restrict and regulate large firms with no competition while supporting small firms
What percentage of the marketplace does the government sector make up?
20-30%
What services does the government sector provide?
Healthcare, education
The government also owns and operates various businesses.
What does GDP stand for?
Gross Domestic Product
What does GDP measure?
The total value of goods and services produced and incomes earned in a country in one year
List areas where government spending includes federal, provincial, and local levels.
- Health care
- Education
- Employment insurance
- Welfare
- Pensions
- National defense
- Police and fire protection
- Business subsidies
- Interest on national debt
What are the three main areas of Canada’s social welfare programs?
- Income Security
- Health Care
- Education
What led to the rise in spending on social welfare programs over 50 years?
- Transition from a rural farm society to an urban industrial society
- Churches and private charities could no longer support the needy
- Increased risks of layoff, disability, and old age
- Depression made people feel the government should provide for them
What are some types of taxes used to pay for social welfare programs?
- Taxes on incomes (personal & business)
- Taxes on spending (sales tax and consumption taxes)
- Taxes on assets (mainly property, capital gains)
- Taxes on employer’s payrolls
What is the largest tax source in Canada?
Income taxes
What is ‘Progressive Taxation’?
A system where people with low income pay lower rates and high incomes pay higher rates
What is Fred’s Marginal Tax Rate if he earns an additional $10,000 and pays $3,500 in taxes?
35%
What can high Marginal Tax Rates discourage?
- Working overtime
- Saving and investing money
- Capital investment by businesses
What are Consumption Taxes?
Taxes on spending by consumers, including Provincial Sales Tax and Goods and Services Tax (HST)
What is considered regressive taxation?
Taxes that take a higher percentage of income from low-income earners
What do Payroll Taxes include?
- Employment Insurance
- Canada Pension
- Worker’s Compensation
- Employer Health Insurance
Define a budget deficit.
When a government spends more than its annual revenues
What is government debt?
The total of government borrowing over many years to cover deficits
What does inflation measure?
How much more expensive a set of goods and services has become over a certain period
What has happened to the Goods Producing Sector in Canada since 1950?
It has decreased to 25% of the workforce
What has happened to the Service Sector in Canada since 1950?
It has increased to 75% of the workforce
List some causes of employment trends in Canada.
- Technological change
- Women in the workforce
- Baby Boom generation
- Greater educational demands
- Increased standard of living
- Greater demand for services
- Urbanization of society
