1. What is Economics?

2. The study of choice under the conditions of scarcity. Microeconomics-study of the behavior and decision making by small units such as individuals and businesses. Macroeconomics-study of the behavior and decision making of large units such as governments. What is Economics?

4. What is Scarcity?!?!? Definition: The concept that there are limited resources for unlimited wants "Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need." ~Excerpt from “Fight Club” American Consumerism Essay 1.Independent Research 2.Read the introduction to “Fast Food Nation” 3.Writing of Response Original thesis statement 2-3 pages in length 3-5 credible sources MLA citation (http://owl.english.purdue.edu/owl/resource/557/01/)http://owl.english.purdue.edu/owl/resource/557/01/ Needs vs. Wants: The Rise of the American Consumer

5. Individual Role vs. Government Role

6. Shortage A shortage shortage occurs when producers will not or cannot offer goods and services at the current price. Examples: Seasonal items, “trendy” items What is the difference between scarcity and shortage? Scarcity is a permanent condition, where shortage is a temporary or long-term result of producers choosing not to produce a good or service.

7. Chapter 1, Section 2: Opportunity Cost Trade-offs- All the alternatives that we give up whenever we choose one course of action over another. All individuals, businesses, and governments make decisions that involve trade-offs. “Choosing is Refusing”

8. GUNS OR BUTTER?

9. Opportunity Cost The most desirable alternative given up as the result of a decision. The next best thing!! There is only ONE opportunity cost for every decision whereas there are THOUSANDS of trade-offs!

10. Our Role in Funding the Government We authorize the government, through the Constitution and elected officials, to raise money through taxes. We authorize the government, through the Constitution and elected officials, to raise money through taxes. Taxation is the primary way that the government collects money. Taxation is the primary way that the government collects money. Without revenue, or income from taxes, government would not be able to provide goods and services. Without revenue, or income from taxes, government would not be able to provide goods and services.

11. Power and Limits of Taxation The Power to Tax Article 1, Section 8, Clause 1 of the Constitution grants Congress the power to tax. Article 1, Section 8, Clause 1 of the Constitution grants Congress the power to tax. The Sixteenth Amendment gives Congress the power to levy an income tax. The Sixteenth Amendment gives Congress the power to levy an income tax. Limits on the Power to Tax 1. The purpose of the tax must be for “the common defense and general welfare.” 2. Federal taxes must be the same in every state. 3. The government may not tax exports.

12. Tax Structures Proportional Taxes Proportional Taxes –A proportional tax is a tax for which the percentage of income paid in taxes remains the same for all income levels. Progressive Taxes Progressive Taxes –A progressive tax is a tax for which the percent of income paid in taxes increases as income increases. Regressive Taxes Regressive Taxes –A regressive tax is a tax for which the percentage of income paid in taxes decreases as income increases.

14. What is a “good” tax? –Simplicity  Tax laws should be simple and easily understood. –Economy  Government administrators should be able to collect taxes without spending too much time or money. –Certainty  It should be clear to the taxpayer when the tax is due, how much is due, and how it should be paid. –Equity  The tax system should be fair, so that no one bears too much or too little of the tax burden.

15. Spending Categories Mandatory Spending Money that lawmakers are required by law to spend Interest payments on the national debt “Entitlement” programs (Social Security, Medicare and Medicaid) Discretionary Spending Money that government planners can choose how to spend. Defense Education Training Environmental cleanup National parks and monuments Scientific research Land management Farm subsidies Foreign aid

16. Types of Taxes Social Security Taxes Social Security Taxes –This program is funded by the Federal Insurance Contributions Act (FICA). Most of the FICA taxes you pay go to Social Security, or Old- Age, Survivors, and Disability Insurance (OASDI) Medicare Taxes Medicare Taxes –Medicare is a national health insurance program that helps pay for health care for people over 65 and for people with certain disabilities. Medicare is also funded by FICA taxes. Unemployment Taxes Unemployment Taxes –Unemployment taxes are collected by both federal and state governments. Workers can collect “unemployment compensation” if they are laid off through no fault of their own and if they are actively looking for work. Other Taxes Other Taxes –Federal Income Taxes –Excise Taxes –Estate Taxes –Gift Taxes –Import Taxes

17. How do WE compare?

18. Guns or Butter? Analyze the federal spending pie chart on page 371. Analyze the federal spending pie chart on page 371. Consider the difference between mandatory and discretionary spending as described on pages 371-374. Consider the difference between mandatory and discretionary spending as described on pages 371-374. Create your own federal spending pie chart based on your priorities. You may not “leave it the same”…think critically about what you think is the best way to spend our tax dollars! Create your own federal spending pie chart based on your priorities. You may not “leave it the same”…think critically about what you think is the best way to spend our tax dollars! Explain the rationale for your spending choices. Explain the rationale for your spending choices. Present your poster and defend your choices. Present your poster and defend your choices.

19. United States “Budget Break-Up” Ben’s Analogy of the US budget!

22. What can we learn from looking at a Production Possibilities Graph/Frontier?  Trade-Offs/Cost- Alternative given up as a result of a decision. Every point on the PPF indicates a cost in on item or another.  Efficiency- Making the best possible use of resources (any point on the PPF)  Underutilization/Inefficiency- Misuse or waste of resources (any point inside the PPF)  Growth- Expanding an economy’s ability to produce (shift of the entire curve to the right or any point to the right of the PPF) ~New Technology/ Innovation ~Increase in Resources