1. Splash Screen

2. Chapter Menu Chapter Introduction Section 1:Section 1:Growth in the Size of Government Section 2:Section 2:The Functions of Government Section 3:Section 3:The Federal Budget and the National Debt Section 4:Section 4:Taxation Visual Summary

3. Chapter Intro 1 All levels of government use tax revenue to provide essential goods and services.

4. Chapter Intro 2 How does the government impact your daily life? Highways and bridges, as well as the taxes you pay on gasoline, are just two examples of government involvement in your day-to-day activities. In this chapter, read to learn why the government collects taxes and what it spends those funds on.

5. Chapter Preview-End

6. Section 1-Main Idea Section Preview In this section, you will learn how the size and spending of government at all levels have increased over the last century.

7. Section 1-Key Terms public-works projects Medicare Content Vocabulary

8. Section 1-Key Terms exceed core Academic Vocabulary

9. A.A B.B C.C Section 1-Polling Question Can you name some other forces that affect the use of resource throughout the economy? A.Many B.Some C.None

10. Section 1 Government Growth Government spending at all levels— federal, state, and local—has increased significantly over the years.

11. Section 1 Government Growth (cont.) Today, about 22 million people work for the government (federal, local, and state employees combined). During the late 1960s, the federal government paid for: –National defense –The salaries of members of Congress, federal judges, and the employees of executive departments

12. Section 1 Government Growth (cont.) –Public-works projectsPublic-works projects View: Government PurchasesGovernment Purchases This continued until about 1970, when federal funds started diminishing.

13. A.A B.B C.C D.D E.E Section 1 Government is involved in the following areas EXCEPT: A.Transportation B.Education C.The Internet D.Taxation E.Worker Safety

14. Section 1 Why Has Government Grown? The level of government spending reflects political decisions about how much goods and services should be provided by the public or private sectors.

15. Section 1 Why Has Government Grown? (cont.) One theory is that as the nation became richer, especially in the late 1960s and early 1970s, people demanded more government services to even out certain income inequities. Today, total government purchases easily exceed one-third of the GDP.

16. Section 1 Why Has Government Grown? (cont.) When the government taxes you to provide you with a particular service, such as Medicare, this cost of government is included in government spending.Medicare –Government activity displaces private economic decision making involved in buying and selling. Government taxing and spending have opportunity costs.

17. A.A B.B C.C Section 1 Do you think that the growth of the government has benefited or hurt society? A.Benefited society B.Hurt society C.It depends on the situation.

18. Section 1-End

19. Section 2-Main Idea Section Preview In this section, you will learn about the responsibilities of government.

20. Section 2-Key Terms public goods income redistribution social-insurance programssocial-insurance programs Social Security workers’ compensationworkers’ compensation public-assistance programs/welfarepublic-assistance programs/welfare Supplemental Security IncomeSupplemental Security Income Temporary Assistance for Needy FamiliesTemporary Assistance for Needy Families Medicaid externalities Content Vocabulary

21. Section 2-Objectives maintain intervene Academic Vocabulary

22. A.A B.B C.C Section 2-Polling Question Should the government make the decision of which goods are desired or undesired in our society? A.Yes B.Somewhat C.Not at all

23. Section 2 Providing Public Goods Public goods are goods or services that many people can use at the same time.

24. Section 2 Providing Public Goods (cont.) Public goods are a special type of good or service that government supplies to its citizens.Public goods Usually, different levels of government share responsibility for public goods, such as the legal system.

25. Section 2 Providing Public Goods (cont.) Some goods in a society are considered to have special merit by government leaders. –Museums and ballets are merit goods and may be subsidized by the government. –Demerit goods are goods that government officials have deemed socially undesirable.

26. A.A B.B C.C Section 2 Which of the following is a public good that only the government can provide? A.Merit good B.Demerit good C.The court system

27. Section 2 Promoting the General Welfare Government can use its power to tax and spend to alter market outcomes.

28. Section 2 Promoting the General Welfare (cont.) Another function of the government is providing for the public well-being by assisting specific groups, such as the aged, ill, and poor. This is done through income redistribution.income redistribution

29. Section 2 Promoting the General Welfare (cont.) Tax dollars are used to subsidize two general categories of assistance: –Social-insurance programsSocial-insurance programs Social Security, unemployment insurance, and workers’ compensation are examples.Social Securityworkers’ compensation –Public-assistance programs/welfarePublic-assistance programs/welfare Supplemental Security Income Temporary Assistance for Needy families Medicaid

30. A.A B.B C.C Section 2 Do you feel that your taxes should be used to assist individuals? A.Always B.Sometimes C.Never

31. Section 2 Regulation and Economic Stability Stable growth, low unemployment, and low inflation are the primary economic goals of government.

32. Section 2 Regulation and Economic Stability (cont.) Two other functions of government involve: –Regulating economic activity View: Government RegulationGovernment Regulation The most important regulatory functions are dealing with externalities.externalities –Trying to ensure economic stability— smoothing the ups and downs in the nation’s overall business activity.

33. –Merit goods should be provided by private organizations instead of taxpayer dollars. –Redistribution programs do more harm than good. –Government regulations raise the prices of goods and services. Section 2 Regulation and Economic Stability (cont.) Critics of government involvement believe that:

34. A.A B.B C.C Section 2 Do you feel that your tax dollars should go toward merit goods? A.Always B.Sometimes C.Never

35. Section 2-End

36. Section 3-Main Idea Section Preview In this section, you will learn how the federal government prepares a budget and borrows funds.

37. Section 3-Key Terms fiscal year budget deficit deficit financing national debt budget surplus Content Vocabulary

38. Section 3-Objectives submit allocate Academic Vocabulary

39. A.A B.B C.C Section 3-Polling Question Do you know how the government prepares its budget? A.Yes B.Somewhat C.Not at all

40. Section 3 The Budget-Making Process Congress and the president work together to prepare an annual budget showing the anticipated federal expenditures and revenues for the coming fiscal year.

41. Section 3 The Budget-Making Process (cont.) The president and various congressional offices work together to prepare the budget. About 18 months before the fiscal year, (October 1 through September 30th) the executive branch of the government begins to prepare a budget.fiscal year Eventually, the president approves this budget plan, and submits it to Congress by January. View: Federal Taxation and SpendingFederal Taxation and Spending

42. Section 3 The Budget-Making Process (cont.) Next, congress is supposed to pass two resolutions that set binding limits on spending and taxes for the upcoming year. View: Steps in the Budget ProcessSteps in the Budget Process Due to delays, the fiscal year sometimes starts without a budget.

43. A.A B.B C.C D.D Section 3 According to the graph in Figure 16.3, where does the smallest chunk of federal spending go? A.Health B.National defense C.Income security, Social Security, and Medicare D.International affairs

44. Section 3 The National Debt A budget deficit results when government expenditures exceed revenues collected, and the difference is financed through borrowing, which adds to the national debt.

45. Section 3 The National Debt (cont.) Most years, the government spends more than it collects causing a budget deficit.budget deficit –The government must raise extra funds through borrowing—or selling government securities to individuals, businesses, and foreign governments. Government overspending is called deficit financing. deficit financing

46. Section 3 The National Debt (cont.) Each year the federal government creates new debt by issuing securities. At the same time, old debt is retired by paying off bonds, notes and bills as they come due. The total amount of outstanding debt remaining is the national debt.national debt A budget surplus applies when government revenues exceed expenditures.budget surplus View: The National DebtThe National Debt View: The National Debt EquationThe National Debt Equation

47. A.A B.B C.C D.D Section 3 The national debt is a result of which two factors? A.Total of all yearly deficits minus any yearly surpluses B.Any yearly surpluses minus total of all yearly deficits C.Total of all yearly deficits plus any yearly surpluses D.Any yearly surpluses plus total of all yearly deficits

48. Section 3-End

49. Section 4-Main Idea Section Preview In this section, you will learn about the major principles and forms of taxation in the United States.

50. Section 4-Key Terms benefits-received principle ability-to-pay principle proportional tax progressive tax regressive tax Content Vocabulary

51. Section 4-Objectives major justify Academic Vocabulary

52. A.A B.B C.C Section 4-Polling Question Do you believe that all Americans should pay the same percentage of their income to federal income tax? A.Yes B.No C.Not sure

53. Section 4 Principles of Taxation Taxes are usually justified according to either one’s ability to pay or the benefits received.

54. Section 4 Principles of Taxation (cont.) Taxes are usually justified according to one of two major principles: –The benefits-received principlebenefits-received principle –The ability-to-pay principleability-to-pay principle

55. A.A B.B Section 4 National defense falls under which principle? A.Benefits-received B.Ability-to-pay

56. Section 4 Forms of Taxation Taxes are classified as regressive, progressive, or proportional, depending on whether the tax as a percentage of income declines, increases, or remains the same as income increases.

57. Section 4 Forms of Taxation (cont.) Three classifications of taxation: –Proportional taxProportional tax –Progressive taxProgressive tax –Regressive taxRegressive tax View: Major TaxesMajor Taxes

58. A.A B.B C.C Section 4 The federal individual income tax system is an example of which class of taxes? A.Proportional B.Progressive C.Regressive

59. Section 4-End

60. VS 1 Government spending at all levels— federal, state, and local—has increased significantly over the years.

61. VS 2 Under the American free-enterprise system, the government regulates certain aspects of the economy.

62. VS 3 The goal of the government’s budget- making process is to balance what the government takes in with what it spends.

63. VS-End

64. Figure 1

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70. Figure 7

71. Concept Trans Menu Economic Concepts Transparencies Transparency 10Income Distribution Transparency 11Market Failures Transparency 12The Role of the Government Select a transparency to view.

72. Concept Trans 1

73. Concept Trans 2

74. Concept Trans 3

75. DFS Trans 1

76. DFS Trans 2

77. DFS Trans 3

78. DFS Trans 4

79. Vocab1 public-works projects: publicly used facilities, such as schools and highways, built by federal, state, or local governments with public money

80. Vocab2 Medicare: government program that provides health care for the aged

81. Vocab3 public goods: goods or services that can be used by many individuals at the same time without reducing the benefit each person receives

82. Vocab4 income redistribution: government activity that takes income from some people through taxation and uses it to help citizens in need

83. Vocab5 social-insurance programs: government programs that pay benefits to retired and disabled workers, their families, and the unemployed

84. Vocab6 Social Security: federal program that provides monthly payments to people who are retired or unable to work

85. Vocab7 workers’ compensation: government program that extends payments for medical care to workers injured on the job

86. Vocab8 public-assistance programs/welfare: government programs that make payments to citizens based on need

87. Vocab9 Supplemental Security Income: federal programs that include food stamps and payments to the disabled and aged

88. Vocab10 Temporary Assistance for Needy Families: state-run program that provides assistance and work opportunities to needy families

89. Vocab11 Medicaid: state and federal public- assistance program that helps pay health care costs for low-income and disabled persons

90. Vocab12 externalities: economic side effects or by-products that affect an uninvolved third party; can be negative or positive

91. Vocab13 fiscal year: year by which accounts are kept; for the federal government, October 1 to September 30 of the next year

92. Vocab14 budget deficit: situation when the amount of government spending exceeds its receipts during the fiscal year

93. Vocab15 deficit financing: government policy of spending more money than it is able to bring in through revenues

94. Vocab16 national debt: total amount of outstanding debt for the federal government

95. Vocab17 budget surplus: situation when the amount of government receipts is larger than its expenditures during the fiscal year

96. Vocab18 benefits-received principle: system of taxation in which those who use a particular government service support it with taxes in proportion to the benefit they receive; those who do not use a service do not pay taxes for it

97. Vocab19 ability-to-pay principle: principle of taxation in which those with higher incomes pay more taxes than those with lower incomes, regardless of the number of government services they use

98. Vocab20 proportional tax: tax that takes the same percentage of all incomes; as income rises, the amount of tax paid also rises

99. Vocab21 progressive tax: tax that takes a larger percentage of higher incomes than of lower incomes; justified on the basis of the ability-to-pay principle

100. Vocab22 regressive tax: tax that takes a larger percentage of lower incomes than of higher incomes

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