Section Outline

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Government’s Role In Our EconomySection 3: Managing the Economy

I. The Nation’s Economic Health

II. The Federal Budget

III. Federal Income and the National Debt

Section Reading Support Transparency

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Government’s Role In Our EconomySection 3: Managing the Economy

Main Idea

The federal government manages the economy

by keeping track of its health and adjusting its

performance. The government also decides how

best to spend the public money it collects in

taxes and fees.

Key Terms

•Inflation

•Gross domestic product

•Federal budget

•Deficit

•Surplus

•National debt

The Nation’s Economic Health

•The federal government constantly checks the health of the economy.

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Government’s Role In Our EconomySection 3: Managing the Economy

•Variables the government checks— Inflation: The general rise of the price level of goods and services.— Gross domestic product (GDP): The total dollar value of all finished goods and

services produced within the country in a year

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Government’s Role In Our EconomySection 3: Managing the Economy

The Federal Budget

•2004 Federal Budget: $2.29 trillion

•Federal Budget— The government’s plan for how much money it will raise and spend

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Government’s Role In Our EconomySection 3: Managing the Economy

Federal Income and the National Debt

•Income Taxes— State and local governments rely mostly on sales taxes and property taxes.— The federal government relies mostly on personal income taxes and social

security taxes.

•Excise Taxes— Charged on specific products

•Tariffs, Fees, and Sales

Go Online: Tax Deductions From Your Paycheck

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Government’s Role In Our EconomySection 3: Managing the Economy

Federal Income and the National Debt (continued)

•Balancing the Budget— Deficit: the amount by which government spending in a year is greater than

government income— Surplus: the amount by which government income in a year is greater than

government spending

•The National Debt— The total amount of money the government owes to lenders

Government’s Role In Our Economy: Section 3Section Reading Support Transparency

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