1) In what way are there limits on each of the fundamental principles of capitalism?
Answer:
a) Rights of the Individual: Individuals have every right to pursue their own self
interest, which includes seeking to make profits from business enterprises. There are
limits placed on individuals’ right to pursue their self-interest. Government regulations
enforce rules that affect how business owners conduct their affairs. b) Rights of private
property: As opposed to state ownership, capitalism asserts that individuals have the
right to own land, labour, and capital. However, because there has been an uneven
distribution of wealth in society, the government has intervened in a number of ways. For
example, taxation is one approach that can be partly aimed at redistributing wealth among
members of society. c) Competition: Competition is the “ invisible hand of the market ”
(in the words of economist Adam Smith) that ensures the market works in this manner. In
Canada, the notion of perfect competition does not exist in practice—there is no
guarantee that an adequate supply of competitors exists across all industries. d) The Role
of Government: The view of government is reflected in the French term laissez faire,
which means “let people do as they choose.” However, the Canadian government has
intervened in business activities in such areas as crown corporations, regulation and
offering subsidies and bail-outs.
Diff: 3
Type: ES
Page Reference: 343
Skill: both
Objective: LO1
2) Briefly describe the differences in responsibilities among the three levels of
government in Canada
Answer:
The government of Canada is organized into three levels: federal, provincial/territorial,
and municipal. Each level has unique responsibilities that govern individuals and
business; however, some powers may overlap or be shared. 1) The federal level of
government is the highest level of government and applies to all Canadians. Some roles
include national defence, criminal law, bankruptcy law, postal service, foreign policy,
currency, First Nations, banking, and immigration. 2) The provincial level of government
is more regional in nature and only affects those citizens and residents who reside in a
particular province. Provincial responsibilities include highways, transportation,
education, and health care. 3) A municipal government can govern a city or a smaller
community, such as a town, village, or parish. Some municipal responsibilities can
include police services, fire protection, land planning, sewage, public transportation,
garbage collection, and library services.
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
, Diff: 2
Type: ES
Page Reference: 344
Skill: both
Objective: LO2
3) In what way does government interact with business in order to fulfil its role as
guardian of society?
Answer:
Collector of taxes from businesses: Government collects two types of taxes:
revenue taxes and regulatory or restrictive taxes. These monies are collected to
help fund government services and program, and include individual income taxes,
corporate taxes, property taxes and sales taxes. Restrictive taxes consist of two
types, including excise taxes and customs duties or tariffs. Excise taxes are
applied to goods and services that the government wants to restrict the purchase
of.
Acting as business owners: Governments sometimes own a federal or provincial
run corporation (sometimes referred to as a public enterprise) that is accountable
to Parliament for its operation through a minister.
Regulating the business sector: The authority of government imposes constraints
to significantly modify economic behavior in the private sector. The motive may
include protection of the consumer or the environment, or protection of fair
competition among businesses.
Safeguarding Canadian interests in the global context: One of the central
objectives of government regulation is to protect the public interest. The
government has the ability to control the operations of private enterprises through
regulations.
Diff: 3
Type: ES
Page Reference: 348
Skill: both
Objective: LO3
4) In what ways are crown corporations necessary?
Answer:
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 2
Answer:
a) Rights of the Individual: Individuals have every right to pursue their own self
interest, which includes seeking to make profits from business enterprises. There are
limits placed on individuals’ right to pursue their self-interest. Government regulations
enforce rules that affect how business owners conduct their affairs. b) Rights of private
property: As opposed to state ownership, capitalism asserts that individuals have the
right to own land, labour, and capital. However, because there has been an uneven
distribution of wealth in society, the government has intervened in a number of ways. For
example, taxation is one approach that can be partly aimed at redistributing wealth among
members of society. c) Competition: Competition is the “ invisible hand of the market ”
(in the words of economist Adam Smith) that ensures the market works in this manner. In
Canada, the notion of perfect competition does not exist in practice—there is no
guarantee that an adequate supply of competitors exists across all industries. d) The Role
of Government: The view of government is reflected in the French term laissez faire,
which means “let people do as they choose.” However, the Canadian government has
intervened in business activities in such areas as crown corporations, regulation and
offering subsidies and bail-outs.
Diff: 3
Type: ES
Page Reference: 343
Skill: both
Objective: LO1
2) Briefly describe the differences in responsibilities among the three levels of
government in Canada
Answer:
The government of Canada is organized into three levels: federal, provincial/territorial,
and municipal. Each level has unique responsibilities that govern individuals and
business; however, some powers may overlap or be shared. 1) The federal level of
government is the highest level of government and applies to all Canadians. Some roles
include national defence, criminal law, bankruptcy law, postal service, foreign policy,
currency, First Nations, banking, and immigration. 2) The provincial level of government
is more regional in nature and only affects those citizens and residents who reside in a
particular province. Provincial responsibilities include highways, transportation,
education, and health care. 3) A municipal government can govern a city or a smaller
community, such as a town, village, or parish. Some municipal responsibilities can
include police services, fire protection, land planning, sewage, public transportation,
garbage collection, and library services.
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
, Diff: 2
Type: ES
Page Reference: 344
Skill: both
Objective: LO2
3) In what way does government interact with business in order to fulfil its role as
guardian of society?
Answer:
Collector of taxes from businesses: Government collects two types of taxes:
revenue taxes and regulatory or restrictive taxes. These monies are collected to
help fund government services and program, and include individual income taxes,
corporate taxes, property taxes and sales taxes. Restrictive taxes consist of two
types, including excise taxes and customs duties or tariffs. Excise taxes are
applied to goods and services that the government wants to restrict the purchase
of.
Acting as business owners: Governments sometimes own a federal or provincial
run corporation (sometimes referred to as a public enterprise) that is accountable
to Parliament for its operation through a minister.
Regulating the business sector: The authority of government imposes constraints
to significantly modify economic behavior in the private sector. The motive may
include protection of the consumer or the environment, or protection of fair
competition among businesses.
Safeguarding Canadian interests in the global context: One of the central
objectives of government regulation is to protect the public interest. The
government has the ability to control the operations of private enterprises through
regulations.
Diff: 3
Type: ES
Page Reference: 348
Skill: both
Objective: LO3
4) In what ways are crown corporations necessary?
Answer:
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 2
