Answers to Review

1. Boycott
•form of absolute restriction on the importation of certain goods
•various types of boycotts occur for social and political reasons
•boycotts have a long and noble history of contributing to progressive social 
•change, as well as succeeding in their more immediate goals
•they have played a significant role in everything from the abolition of slavery to the
curtailment of the fur industry
•some famous boycotts include the Boston Tea Party, Rosa Parks boycotts of various Olympic
games
boycotts can also be in the form of consumer activism such as Nestle, Nike, Abercrombie

Underground Economy
•The underground economy involves economic transactions not measured by government
statistics and ignoring government regulations and laws. 
•is also referred to as: 'black market' 'shadow economy',
•black market activity includes the sale of drugs prostitution and illegal guns/weapons sale
•also includes "cash transactions"  otherwise known as being "paid under the table" 
•statisticians have estimated that these activities would add  3-20% to the value of GDP

Lobbyist
•There are many lobbyists in Ottawa representing a variety of broad economic and social
interests. These lobbyists are paid to provide government members with information designed
to influence a particular point of view. Some examples would include: representatives of the
real estate, tobacco and oil industries, medical practitioners and educators.
 Examples use from M/C monuments builders or Legally Blonde

Public Good
•If you guessed that it had something to do with the rescue personal  you are on the right track.
•the rescue personal that attended to this situation are considered a "public good" 
• Public goods are goods that are not provided by the free market system (ie. consumers do not
pay a fee for their use)
•Public goods are economic products that are consumed collectively, like highways, sanitation,
schools, national defense, police and fire protection.
•the government pays for these goods and services by collecting taxes
•too difficult to charge a fee based on their use

2. Why does the government intervene? Use examples/cases to help you answer the question
1. The government intervenes to correct market failure. If an economy is in a recession (ie
market failure) it experiences decreasing GDP and high unemployment the government must
intervene by increasing taxes and or increasing government spending. An example of this
occurred during the 2008-2009 global financial crisis when the government invested in GM in
order to turn profits around. As GM increased productivity, they needed to hire more workers,
more workers then had an income to spend on goods and services, therefore increasing both
GDP and decreasing unemployment.
2. Achieve a more equitable distribution of wealth and income. The government does this by
collecting taxes from the rich and transfer the money to lower income groups in the form of:
tax credits
rent controls
minimum wage
social assistance
food banks
corporate-funded or government-subsidized daycare
public and private funding of social programs,
programs to upgrade job skills or literacy
3. Improve the performance of the economy. The government must interfere when there are
market imperfections that cause poor performance in the economy. One example of market
imperfections is lack of correct information. Examples: Humira, Puseteries, Kim Kardashian.
Another market imperfection is lack of competition. As we know competition is good for the
consumer. Lack of competition leads to price fixing ex. Bank TD and Canada Trust etc.

3. 1. Government as customer – buy thousands of products and services

ex. Pay Steve’s Paving to pave the parking lot of the municipal offices in Oakville
2. Government as a Competitor-compete with businesses through crown corporations
ex. LCBO Canada Post
3. Government as a regulator – regulate businesses through administrative boards and
commissions
ex. Canadian Wheat Board regulates quotas and price of wheat
It is necessary to regulate to protect competition (Canada Trust example again) and protect
consumers from hazardous product acts (Puseteries again), achieve social goals (universal
health care) and protect the environment (Fisheries Act)
4. Provider of incentives – money to train employees, incentives to start new businesses, tax
rebates (extra curricular tax credit for children.
5. Provider of essential services - Health Care (OHIP), Education, National Security, Police/Fire,
Transportation/ garbage collection

4. 1. Professional Associations
• defined as "a body of persons engaged in the same profession, formed usually to
control entry into the profession, maintain standards, and represent the profession in
discussions with other bodies. (ie CPA Certified Professional Accountants)
2.Worker Run Cooperatives
• Worker cooperative businesses are owned and run by their members, the people who
work in them, and they operate for the benefit of these members.  (MEC Mountain
Equipment Co-op)
3. Employee Contract Workers 
 • An employee who works under contract for an employer. A contract employee is hired
for a specific job at a specific rate of pay. A contract employee does not become a
regular addition to the staff and is not considered a permanent employee.
• Typically these workers are not entitled to benefits such as sick days, paid vacation,
pensions and insurance.
4. Foreign Domestic Workers
• workers (primarily women) who enter the country to provide variety of household
services for an individual or a family, including:  care for children and elderly
dependents, housekeeping, including cleaning and household maintenance.
• These workers enter on a temporary work visa but can apply for permanent residence in
Canada after two years.
5. Temporary Foreign Workers
• allows Canadian employers to hire foreign nationals to fill temporary labour and skill
shortages when qualified Canadian citizens or permanent residents are not available.
• the Temporary Foreign Workers Program started in 1973 when Canadian hospitals
brought in highly skilled doctors when there was a shortage
6. Labour Unions
• Are a  group of individuals who work together to achieve shared job related goals and is
an organization that supports its members by negotiating matters such as wages,
working conditions, job security and other benefits
5. Rights of Employees
• minimum age for employment
• hours of work
• minimum wage
• overtime, holiday and vacation pay
• parental leave
• individual and group termination of employment
• the recovery of unpaid wages
6. Rights of Employers
• decide what their employment needs are
• require that employees have job-related qualifications and/or experience
• hire, promote, and assign the most qualified person for a position
• establish standards for evaluating job performance
• require that employees adhere to clearly defined job descriptions and performance
criteria
7. The Gini coefficient :
• Measure of income inequality
• Measured on a scale of 0 to 1
• Most importantly to understand: the Gini Coefficient calculated the extent to which the
distribution
of income among individuals within a country deviates from an exactly equal distribution
• A Gini Coefficient of 0 represents exact equality (ie every person in the society has the
same amount of
Income
 • A Gini Coefficient of 1 represents total inequality ( ie. One person in the society has all of
the income
and the rest of the society has none)
A Gini coefficient of .72 would mean that the country has substantial income inequality

8. Social Assistance
 Payments made to individuals based on need or min. income requirement to cover costs
such as food, shelter or clothing
 It has been argued that Across Canada, social assistance plays an important, but
insufficient, role in poverty alleviation. Higher social assistance benefit levels would
likely result in tangible outcomes, including less food insecurity, improved health
outcomes and less homelessness. 
 It some provinces it is as low as $8 000 annually

Unemployment Insurance
 Unemployment insurance, renamed employment insurance, is a type of insurance that
pays out when you lose your job and meet certain eligibility requirements. You will not
receive unemployment benefits if you quit your job, are self-employed, or if you are
fired for cause
 It is financed by premium paid by employers and employees and the federal
government
 Provides temporary income support to unemployed workers while they look for
employment or upgrade their skills

Child Tax Benefits

 The Canada child benefit (CCB) is administered by the Canada Revenue Agency (CRA). It
is a tax-free monthly payment made to eligible families to help with the cost of
raising children under 18 years of age. The CCB may include
the child disability benefit and any related provincial and territorial programs.
 Used to be called the baby bonus years ago
 Based on income earned by parent(s)

Old Age Security

 The Old Age Security (OAS) pension is a monthly payment you can get if you are 65 and
older. 
 You may also be eligible for the Guaranteed Income Supplement if:
 you are 65 or older
 you live in Canada
 you get the Old Age Security pension
 you meet certain income minimum requirements
 9. Sales Tax – pay tax on most goods and services that you buy. In Ontario the Sales tax is
GST (harmonized tax of federal and provincial tax together) 13%
Some goods and services are exempt such as diapers
Property Tax
• If you own a house, a condominium, a building or land, you pay property tax every year
to the town or city government.
How much you pay in property tax depends on the value of the house and the land. Your
city or town government will send you a letter that tells you how much you have to pay and
when you have to pay it.
Consumer Tax
• Included in the price you pay for these specific items. Examples include tobacco,
gasoline and carbon tax.
Income Tax
• Tax that is based on individual income earned. A portion goes to the federal government
and a portion goes to the provincial government.  The largest tax you will pay.
Duty
• Tax that is paid on goods that are bought in another country and brought into Canada.
Excise Tax
 A special type of tax put on goods and services that are deemed by the government
to be harmful. Also called a sin tax.
10.
Here is the answer to question 10:
 11.
•Most of us would answer is that high inequality raises a moral question about fairness and
social justice
•BUT it is being argued that it is not just a moral issue but income inequality is hurting the
economy
•This is a fairly new concept as up until recently, economists believed that equality and
efficiency were trade-offs
•It was argued that the more income equality the less incentives people had to work harder, to
invest, and to advance themselves in the workforce by gaining more education
•Economists state that “some of today’s inequality may be inefficient rather than growth
promoting”
•According to a study done in 2011 by IMF “equality appears to be an important ingredient in
promoting and sustaining growth and that in fact countries may find that improving equality
may also improve efficiency.”
•Some authors even will argue that the 2008/09 global financial crisis may have resulted from
the increase in inequality
•As inequality rises, people on the bottom of the income scale tend to borrow more, increases
the risk of a major crisis as they are unable to pay their debts
•Also severe inequality increases social and political instability which reduces foreign
investment

12. Why is Income Inequality Rising?

1.Market Forces
a.Increasing demand for highly skilled labour – new technologies have “pushed up the demand
for the brainy and well-educated”
b.Increased Globalization – the gap between the richest and poorest countries is widening
2.Institutional Forces – such as declines in unionization rates, stagnating minimum wage rates,
deregulation, and national policies favour the rich
3. The Current COVID crisis.
 higher-paid workers are working from home while lower-paid blue-collar workers
typically do not have this option.
 a higher share of low-paid workers is in essential services such as nursing, policing,
teaching, cleaning, refuse removal, and store attendants where they are more likely to
come into contact with people who are infected.
 lower paid workers are more represented in the sectors that have suspended activities
such as hotels, restaurants and tourism services.
 the pandemic is increasing poverty and inequality between richer countries that can
afford to bail out their firms and provide social safety nets, and poorer countries that do
not have the capacity to do so.

What Can Be Done to Reduce Inequality

•Businesses, governments, and charities can intervene and provide:
•Tax credits
•Rent controls (price ceilings)
•Minimum wage (price floors)
•Social assistance
•Food banks
•Corporate-funded or government subsidized daycare
•Programs to upgrade jobs skills or literacy
•Personal income taxes and government transfers (such as social assistance, unemployment
insurance, old age security, and child benefits) help reduced income inequality