Chapter 18 Public Finance

Start it out  page 481  Civics in the Real World  Read about Deborah  Answer Citizen’s Journal (your note book)  Make a list of what we get in exchange of taxes

18.1 Government and Economic Goals Vocabulary (look up here )  Full Employment  National Income Accounting  Economic Growth  Inflation  Deflation  Boo Yah!!!!!

Government and Economic Goals (cont.)  Main Idea: The federal gov’t plays an important economic role. It provides jobs, keeps prices stable, taxes and spends in a pattern that stimulates economic growth. Where does the word “economy” come from?? Compliment Game Anyone? Ayyy Lmao

Full Employment & Price Stability The Employment Act of 1946  WWII over, the boys come home!  They need jobs  Fear of Depression -> Congress went to work, passed the bill with the intention promote employment

“… the General Welfare”  Where did you hear or see that before?  Compliment point!  … became the pretense for the Gov’t to take action  Gov’t assumed responsibility and committed to F.E. & P.S.

Full Employment Unemployment is ugly stuff …  Disrupts families  Crime  Productivity Full Employment – every person who wants to work, should have a job!

Price Stability  Broke in the store– bummer  Employment Act of 1946 – … the federal gov’t will “promote maximum … purchasing power” through the use of economic power to stabilize The Constitution made the ground rules for a market economy:  Protection of private property against theft  Corporation laws  Populate expectation

Compliment point! What was the chief Goal of the Employment Act of 1946?

???????????????????????????????????? The Act commits the government to providing jobs for all who want them and promoting maximum purchasing power for price stabilization! DANG dats GOOD!

Government and the Circular Flow  Compare the charts on pages to …  read 484  What is different?  What is the same?  Answer a. & b. on 484 …

Adding Gov’t to the Circular Flow  484 – 485  Center icon is Gov’t (Federal, State & Local)  All have power to TAX  PROVIDE GOODS AND SERVICES  Fed- National defense  State – higher education / State Parks  Local – Public Education / Libraries MIXED ECONOMY

Businesses Pay for taxes out of their profits  Federal  State  Local  Property taxes  Gasoline  Vehicles –cars / trucks Gov’t provides  Highways  Police protection

Individuals …  Almost all pay taxes  Largest is Federal Income Tax ( )  State taxes  Sales tax  Local taxes  Vehicles taxes

Individuals cont.  Federal government provides  Disaster relief, Health care, Social Security, Veteran’s Benefits,  State Gov’t provides  Education, Transportation, Judicial Services  Local Gov’t Provides  Public education, public safety, hospital services

Civics and Economics 486 Read aloud RSS  Analyze Economics  Answer 1 & 2 via RSS

Reading Check page 486 …  What role does the government play in the flow of economic activity??  Compliment point?

Reading Check … The government taxes business and individuals. It provides goods and services in exchange for the taxes it collects.

National Income Accounting  Keeps track of overall spending and income  Data on production  Data on Earnings, Savings and Investments  Is an indicator of economic health What does our economic health look like?

Gross Domestic Product  Total dollar value of all goods and services sold per year  Monetary Measure  Wide variety of goods & services (G & S)  Non-productive payments excluded  Buying & selling of stocks not included (exchange of paper)  Value of G & S counted once (used car v. final price-new car)  Calculating GDP ( chart page 487)

Spending, Income and GDP  healthy economy, total spending = total income  What is spent in GDP = income to those produced  Flow chart ,  spending side=G&S bought  Income side = value wages, salaries, investment interest, rents and profits  Page 488

GDP LOOK AT THE GRAPH ON 488 ANSWER 1 & 2

Policy Goals to Improve the Economy  GDP = measure of economic health  Yearly increases without major price increases = economic growth  Government GOALs---   Economic Growth: is an increase in the production of G&Ss that bring a higher standard of living  Full employment - jobs  Price stability – maximum purchasing power

What to AVOID! INFLATION: THE LARGE INCREASES IN OVERALL PRICES …

What ELSE to AVOID! DEFLATION: CAN YOU GUESS IT??

DEFLATION ACCORDING TO BRADY !

DEFLATION : THE (OVERALL) DECREASE IN PRICE LEVELS

Reading Check page 489 Why is economic growth important? Economic growth makes a higher standard of living possible.

IN YOUR NOTE BOOK: 2A-4B

Stay seated until the bell rings