Higher Level Questions: (p.40) 1. What are public goods and services? 2. How do governments produce public goods and services? 3. What is the role of the Federal Reserve System in maintaining a stable economy? 4. How does the government influence economic activity?

Ways the government promotes marketplace competition ****** GOVERNMENT AGENCIES These agencies oversee the way individuals & companies do business.

Bulldog Marketplace CE13a Government Agencies that regulate business These agencies oversee the way individuals and companies do business.

FCC (Federal Communications Commission) EPA (Environmental Protection Agency) FTC (Federal Trade Commission)

Ways the government promote marketplace competition

Enforcing antitrust legislation to discourage the development of monopolies Engaging in global trade Supporting business start-ups

Describing the protection of consumer rights and property rights CE13e

Individuals have the right of private ownership, which is protected by negotiated contracts that are enforceable by law.

Government agencies establish guidelines that protect public health and safety.

Consumers may take legal action against violations of consumer rights

CE13b (p.42) Characteristics of public goods and services

Include such items as interstate highways, postal service, and national defense Provide benefits to many simultaneously Would not be available if individuals had to provide them

Ways governments produce public goods and services

Through tax revenue Through borrowed funds

CE 13c (p.43) Taxation 16 th Amendment

The government taxes, borrows, and spends to influence economic activity.

Government tax increases reduces the funds available for private and business spending.

Tax decreases increase funds for private and business spending.

Increased government borrowing reduces funds available for borrowing by individuals and businesses

Decreased government borrowing increases funds available for borrowing by individuals and businesses

Increased government spending increases demand, which may increase employment and production Higher taxes

Decreased government spending reduces demand, which may result in a slowing of the economy Lower taxes

Increased government spending may result in higher taxes; decreased government spending may result in lower taxes.

Warm-Up (p.45) CE13c 1.Which Amendment gave Congress the power to tax incomes? 2. When government spending increases what effect does it have on the economy? Name 3 3. How does government borrowing effect the economy?

1.The 16 th Amendment to the Constitution of the United States of America authorizes Congress to tax incomes (personal and business).

2. Increased government spending increases demand, which may increase employment, production and higher taxes

3. Increased government borrowing reduces funds available for borrowing by individuals and businesses  Decreased government borrowing increases funds available for borrowing by individuals and businesses

CE 13d (p.46) Federal Reserve Bank

Bank of America Suntrust Wachovia Federal Reserve Bank

Federal Reserve System The Federal Reserve System (Fed) is the central bank of the United States.

Federal Reserve Bank Suntrust Bank

Federal Reserve banks act as a banker’s bank by issuing currency and regulating the amount of money in circulation.

Federal Reserve Bank Cause The Federal Reserve bank restricts the money supply Effect Causes interest rates to rise

Cause The Federal Reserve Bank increases the money supply Effect Causes interest rates to decline

Ways the Federal Reserve Bank slows the economy Increases the reserve requirement Raises the discount rate Sells government securities Restricts the money supply causing interest rates to rise

Ways the Federal Reserve Bank stimulates the economy Lowers the reserve requirement Lowers the discount rate Purchases government securities Increases the money supply causing interest rates to decline

Federal Reserve Bank Definitions p.47 What is the FED: FED is the central bank of the United States that acts as a Banker’s Bank by using currency and regulating the amount of money in circulation.

Reserve Requirement: Deposits that banks may not loan and has to keep in the bank or on deposit in the FED Discount Rate: Interest rates charged to commercial banks by the FED

Government Securities: The US treasury issues securities to raise the money to run the federal government and to pay off maturing obligations

What happens when banks make loans to customers? The money supply is increased as new money is created

Warm-Up p.40 How does the government promote marketplace competition? Name 2 public goods and 2 public services. How does the Federal Reserve Bank slow down the economy? How does the Federal Reserve Bank stimulate the economy?

CE13 F United States Coins and Currency p.48 When the United States government issues coins and currency, people accept it in exchange for goods and services because they have confidence in the government. Government issues money to facilitate this exchange The three types of money generally used in the United States are: –Coins –Federal Reserve notes (currency) –Deposits in bank accounts that can