Warm-up (place on your warm-up page)

1. Name the 3 ways the government gets involved in the economy.

Monitors businesses Protects the consumer Provides public goods

and services2. Name the 4 government

agencies that regulate the economy.

FCC EPA FTC Fed

3. Create a chart like the one below and Name at least 2 public goods and/or services provided by each level of government.

Federal Government

State Government Local Government

1.

1. 1.

2.

2. 2.

FCC EPA FTC Fed

_____ 1. A magazine ad claims that Clear-Up Acne Cream kills germs and is odorless and colorless. The cream contains no germ-killing ingredients._____2. Mr. Clean claims that the “Our Pal Sal” radio program contains foul language and inappropriate discussions for children. _____ 3. The Yummy Chicken Company has been dumping untreated waste from its factory into a nearby river. The water is now polluted and fish are dying. _____ 4. This government agency issues TV and movie ratings. _____ 5. The value of the US dollar is declining on the global market. _____ 6. This government agency monitors the ozone and other air pollution. _____ This government agency regulates the prices of goods and services to make sure consumers are protected. _____ 7. This government agency puts “explicit lyrics” warnings on CDs._____ 8. Numerous banks in New York City are t risk of closing down._____ 9.This government agency investigates ground and water contamination. _____ 10. This government agency is given the task of regulating false advertising._____ 11. When Congress banned cigarette commercials from playing during peak broadcast hours; it was with the help and recommendation of this agency. _____ 12. The US economy is at risk for another recession._____ 13. When your TV has censor bars or “beeps” that’s thanks to this agency. _____ 14. When monopolies are stopped, its due to the efforts of this agency. _____ 15. The FDIC promises to ensure customer deposits in banks

Money is a scarce or limited resource.

Governments cannot just keep making money when it needs it.

That would cause inflation.

So, if the amount of money in the US is limited,

what happens when the government uses this resource?

FUNDSGovernment Use

HOW MUCH MONEY IS LEFT IN THE ECONOMY FOR THE CITIZENS?

Limited Resourc

e

Government Taxing, Borrowing and Spending

Each level of government in the United States needs to support its growing responsibilities to the public and to the economy.

So, it seeks to influence economic activity 3 ways:

1. Borrows funds2. Spends money3. Collects taxes

In order to collect tax revenue, the 16th Amendment of the Constitution authorizes Congress to levy and collect

taxeson both personal and business incomes.

You will get a cup with 20 beans. This is your “money” .

Separate your money into 2 piles- 1. Take 25% of your money and set it

aside for taxes2. The other pile is your income for

you to spend. What will you do with this money?

The government has more expenses, so taxes are increased to 40%.

Rearrange your money to put the appropriate amount into the tax pile.

What has happened to your income?

What choices do you have to make now?

Now the government has caught up on all of its expenses, so it needs less funds.

Taxes are lowered to 10%

Reorganize your money to reflect only 10% going out in taxes.

What has now happened to your personal income to spend?

Let’s review…When the government taxes… … it affects the funds available for individual and

business spending INCREASES

DECREASES

DECREASES

INCREASES

Pretend you are now a bank and your beans are the amount of money available to loan out.

You only have a limited resource to loan. The government needs to borrow 15 beans to pay for expenses.

How much is left to loan out to individuals and private businesses?

Now, the government has no new projects, so it borrows less money.

It only needs to borrow 3 beans.

What has happened to the amount left for individual and business to borrow?

Why has this happened?

Let’s Review…When the government borrows money… ... it affects the funds available for individual and

business can borrow INCREASES

DECREASES

DECREASES

INCREASES

Why does the government collect tax revenue and borrow money?

It uses it to spend on public goods and services.

Lets see what happens when the government spends…

When the government spends money…

... it affects the amount of demand…

… which can affect employment and production…

… which can affect taxes

… it can affect the economy by

INCREASES

DECREASES

INCREASES INCREASES INCREASES

DECREASES DECREASES DECREASES

Making the Economy grow

Slowing down the economy

Which amendment to the Constitution allows the government to levy and collect income tax?

16th

Homework

Study vocab from lessons #5-7 for a vocab quiz next class

SOL Review packet due 5/14