Quick Review of Ch. 17 Money and Banking What are the purposes of money? Why is a twenty dollar bill worth 20 dollars? What are the reasons for having banks? If banks are businesses, how do they make money? What is the Federal Reserve and what does it do?

Ch. 18 Public Finance *Chapter Focus: An important role of the government is to help maintain a stable economy.

Section 1: Government and Economic Goals In tough economic times, the government takes steps to help Americans achieve full employment and the market gain price stability. Ex: Social Services to Help People Find Jobs Ex: Govt. makes sure bread doesn’t cost $50 a loaf

Government’s Involvement in the Flow of the Economy The Government uses our tax dollars to pay for important needs such as disaster relief, public education and often hospital services. Income tax: based on money individuals earn each year Sales tax: added to the price of a good or service

National Income Accounting *Our nation keeps track of our overall income and spending. GDP (Gross Domestic Product) The total dollar value of all final goods and services produced and sold w/n the country in a year. *It’s a measure of the country’s economic health.

Section 2: Paying for Government *Taxes are the main way the government and services it provides are paid for. Characteristics of a Good Tax Govt. should not spend too much to collect it. Citizens should know the tax is serving a good purpose. Must treat people fairly. Must be certain. Taxpayers know when it is due, how much is due, and how to pay it.

Types of Taxes Proportional Tax: each taxpayer pays the same % of their income Regressive Tax: takes a larger % of income from a low-income person than a high-income Progressive Tax: takes a higher % of income from high- income than from low-income Excise Tax: sales tax on specific types of goods Ex: High Tax on Cigarrettes

Section 3: Government Policy and Spending *Key Idea: To spend tax $ wisely, governments must set goals that are acceptable to citizens and they must develop budgets.

Types of Government Budget Outcomes Budget Surplus: government spends less than it receives in revenue (Income) Balanced Budget: planned spending equals revenue (income) Budget Deficit: government spends more than it receives in revenue

National Debt National Debt: the total amount of money the federal government has borrowed (such as from wealthy individuals, businesses and other countries governments) and has not yet repaid. The National Debt is currently close to 17,000,000,000,000 (17 Trillion)!!!! And it’s growing. We need to find ways to lower our national debt. What can our government do? Check out this link to see an estimated ongoing count of the US National Debt. http://www.usdebtclock.org/

Quick Review of Ch. 18 What actions might the government take to promote a healthy and stable economy? What characterizes a good tax? Which kind of tax do you think is the best? Why? Why do you think our government is having such a difficult time maintaining a balanced budget?

Ch. 18 Assessment Page 506 Complete # 1 – 12; 14, 17 - 18 Reviewing Key Terms Write out the sentence with correct term underlined. Comprehension and Critical Thinking and Activities Write out the question and your response. * Turn in for a grade when completed..