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The Role of Government in the Economy - Coggle Diagram
The Role of Government in the Economy
Promoting a Stable Market - Governments implement regulation and prevent monopolies and encourage competition to ensure the best product in markets. This means that prices remain stable enough for people to afford. When the government ensures resources and non-fluctuating prices give citizens better living standards.
What is a Monopoly - A company has complete control over the supply of a product. This eliminates the need for competition
Why are Monopolies Bad - Monopolies are bad because they can set any price they want and overcharge for products, can sell inferior products under the guise of a powerful company, they lose incentive to create new products, and they inflate prices.
Example of a Monopoly - Canada Post is a monopoly because it is the only mail service in Canada. It delivers packages and letters at low costs. It is also a crown corporation controlled by the government. There is no competition for post office companies, although people have found a way to make money by delivering packages.
Ensuring the Safety of the Consumer - Governments oversee the production of some goods and services and make sure that consumers are not harmed. Some products like Monster Energy and cigarettes have warning labels on it so consumers know that they are purchasing something that could potentially harm them. Laws are put in place to ensure that producers follow safety standards.
Role of Health Canada - Health Canada is responsible for the national health policy and sets regulations on companies that produce goods for consumers. They make it so the nutritional value is displayed clearly on packaged products
Role of CSA - Improve, coordinate, and harmonize the regulation of of Canadian capital markets. The share ideas and work on designing policies and regulations across the country and educates citizens about economics.
Product Recalls - It's possible for the government to not oversee some factors of production and allow something harmful to enter the market. This can be a food or a vehicle. Once they catch it, they can force the company selling the product to recall it. The consumer can get a refund or their product repaired.
Environmental Protections - Companies sometimes focus on their own greed and monetary profit instead of environmental sustainability. Government agencies are set to ensure companies met environmental protection standards
Why is it Important - They reduce carbon emissions and greenhouse gases being released in the air, making pollution and the destruction of animal habitats less of an issue. Encouraging the use of renewable and sustainable resources means that the resources will be there for many years to come.
Example of Environment Regulation on Businesses - The Clean Fuel Regulations Act under the CEPA (Canadian Environmental Protection Act it aims to reduce the carbon emissions from liquid fossil fuels.
Government Involvement in the Economy - Governments intervene in the economy to ensure the implementation of good governance, or measuring how the governments conduct public affairs and manage resources in the economy. It's to ensure the government is held accountable and to avoid corruption, upholding that nation's values.
Government Corruption and Collusion - Governments hold a lot of information that normal citizens are not aware of. It gives them power, and they might use that knowledge for personal gain. It's illegal for government officials to use that private information in a way that isn't authorized and allowed for profit, it's called insider-trading.
Examples: Bribes are commonly used to pay government officials to obtain this insider information. Extortion and embezzlement are also common.
Waste and Inefficiencies - Government employees are well paid and and have good job security, which leads them to slack off on their job. Private companies make it so that you are more competitive and have an incentive to work harder, which is why people think that people think that crown corps should be privatized.
Crown Corporations - They are companies owned by federal or provincial organizations that are structured like private businesses. They have objectives that are a mixture of commercial and public-policy.
What are they and Why do they Exist - They have been explained above and their purpose is to fulfil a need that would usually not make any profit for a private company, to use tax dollars to create the infrastructure in order to create a higher profit, and to promote Canadian culture and identity.
Examples - The CRTC (Canadian Radio-Television and Telecommunications Commission) plays a certain amount of Canadian content, whether it be music or news, on stations that broadcast information to citizens.
Prevent Price Fixing - The government can ensure companies can't fix their prices to be askew from the law of supply and demand. It means that prices can be kept affordable.
What is Price Fixing + Example - Price fixing is when several companies inflate their prices to increase profits. It goes against the laws of supply and demand and creates an oligarchy - when several companies control the market. An example of it would be if major gas companies decided to all increase their prices at once to increase profit.
What Act Protects Consumers from Companies Price Fixing - The Competition Act prevents price fixing and promotes competition in the market to ensure consumers get the best product.
Labour Laws - The Government has laws in place to protect workers and employers, ensuring that they are being treated fairly and ensuring their safety.
Describe what they are - Factors like hours of work, minimum wage, breaks, termination notice and severance pay, vacations, holidays, and sick leaves are all controlled by the government to ensure that workers are given rights.
Why are they Important - Labour laws are required to protect workers' rights. It ensures that workers and employers are given an equitable and productive workplace to be in.