1. The Role of Government in the United States Economy How does the United States government promote and regulate competition?

2. Economic Terms Consumers – A person who buys goods and services Consumers – A person who buys goods and services Credit – Money that a bank or business will allow a person to use and then pay back in the future Credit – Money that a bank or business will allow a person to use and then pay back in the future Deflation – Decrease in the amount of available money or credit in an economy that causes prices to go down Deflation – Decrease in the amount of available money or credit in an economy that causes prices to go down Entrepreneur – A person who starts a business and is willing to risk loss in order to make money Entrepreneur – A person who starts a business and is willing to risk loss in order to make money Exports – Goods or services produced in one nation but sold to buyers in another Exports – Goods or services produced in one nation but sold to buyers in another Imports – Goods and services bought from sellers in another nation Imports – Goods and services bought from sellers in another nation

3. Economic Terms Continued Inflation – A continual increase in the price of goods and services Inflation – A continual increase in the price of goods and services Interest Rates – Price paid for borrowing money, usually in the form of a percentage Interest Rates – Price paid for borrowing money, usually in the form of a percentage Revenue – Money that is made by or paid to a business or organization Revenue – Money that is made by or paid to a business or organization Stock – A share of the value of a company which can be bought, sold, or traded Stock – A share of the value of a company which can be bought, sold, or traded Tariff – A tax on imported goods Tariff – A tax on imported goods

4. What do we have? Framers established an outline for the economy in Article 1, Section 8 in the Constitution Framers established an outline for the economy in Article 1, Section 8 in the Constitution The Framers originally planned for the government to play a limited role in the country’s economy The Framers originally planned for the government to play a limited role in the country’s economy Framers established guidelines for a market economy Framers established guidelines for a market economy An economy where decisions on investment, production, and distribution are based upon supply and demand An economy where decisions on investment, production, and distribution are based upon supply and demand Ensures prices are established with a free price system Ensures prices are established with a free price system What you buy and do not buy affects your prices! What you buy and do not buy affects your prices!

5. Role of Government The federal government is constantly watching over the state of the economy through the following methods: The federal government is constantly watching over the state of the economy through the following methods: Unemployment rate Unemployment rate Number of jobs created each month Number of jobs created each month Amount of money received from exports Amount of money received from exports Economy growth is measured by the GDP Economy growth is measured by the GDP The total dollar value of all final goods and services produced within the country in a year. The total dollar value of all final goods and services produced within the country in a year. A rising GDP without rising prices means the economy is growing. A rising GDP without rising prices means the economy is growing.

6. Regulating Currency How does the Federal Reserve System regulates the money supply ? How does the Federal Reserve System regulates the money supply ? The Federal Reserve System (Fed) is the central bank of the United States. Federal Reserve banks act as a banker’s bank by issuing currency and regulating the amount of money in circulation.

7. Regulating Currency The Federal Reserve System, acting as the central bank, regulates the money supply. The Federal Reserve System, acting as the central bank, regulates the money supply. To slow the economy, the Federal Reserve Bank restricts the money supply, causing interest rates to rise To slow the economy, the Federal Reserve Bank restricts the money supply, causing interest rates to rise To stimulate the economy the Fed increases the money supply, causing interest rates to decline. To stimulate the economy the Fed increases the money supply, causing interest rates to decline.

8. Government Agencies That Help in our Economy Bureau of Economic Analysis (BEA) Bureau of Economic Analysis (BEA) Provides economic statistics that allow researches and the public to understand the performance of the Nation’s economy. Provides economic statistics that allow researches and the public to understand the performance of the Nation’s economy. Bureau of Public Debt Bureau of Public Debt Agency responsible for borrowing money to ensure the government continues to operate. You can contact them if you are interested in purchasing government bonds. Agency responsible for borrowing money to ensure the government continues to operate. You can contact them if you are interested in purchasing government bonds. Environmental Protection Agency (EPA) Environmental Protection Agency (EPA) Research and enforce environmental regulations Research and enforce environmental regulations Federal Financing Bank Federal Financing Bank Created to manage federal borrowing Created to manage federal borrowing

9. What do you get from the economy? Goods and Services provided by the government: interstate highways postal service national defense May not be available if individuals/private businesses had to provide them

10. How does the government pay for those goods and services? Through tax revenue Through tax revenue The 16th Amendment to the Constitution of the United States of America authorizes Congress to tax incomes (personal and business). The 16th Amendment to the Constitution of the United States of America authorizes Congress to tax incomes (personal and business). This provided more money for the government to fund projects that it needed to pay for so that the U.S. economy could grow. This provided more money for the government to fund projects that it needed to pay for so that the U.S. economy could grow.

11. Government tax increases reduce the funds available for private and business spending Tax decreases increase funds for private and business spending. How do tax increases and tax decreases impact you?

12. Consumer Rights What rights do you have in our economy? What rights do you have in our economy? Individuals have the right of private ownership Individuals have the right of private ownership Government agencies establish guidelines that protect public health and safety. Government agencies establish guidelines that protect public health and safety. Consumers may take legal action against violations of consumer rights. Consumers may take legal action against violations of consumer rights.