1. Optional HW (for extra credit): A short talk (100 words: intro, body, conclusion + phrases from pp 53-54) on one of the following topics: –a football / hockey / basketball... match –your hobby (dancing, chess, volunteering...) –why you are studying economics/business –is Kovač going to pull it off... –BODY LANGUAGE

2. HW check: Submit notes on Manufacturing and services RB, p 18 I central / local government unlimited wants basic economic problem free market / capitalist / planned / mixed economy market mechanism level playing field fair competition public / private sector income distribution supply and demand resource allocation

3. RB, p 18 II allocate resources pass laws provide (essential) products and services ensure a level playing field plan the production process organize / co-ordinate the production process distribute goods and services supply (some) public goods make production decisions III market mechanism, automatic allocation, competition, public goods, allocation → HANDOUT: Types of economies - review

4. MK, p 109-110: The role of government (Reading & questions) Comprehension Discussion Whose opinion on the role of government is closer to your personal views? The Friedmans or J.K. Galbraith HW: Make notes comparing the two views (handout with prompts or create your own) Vocabulary, p 111 Listening

5. Government intervention (Listening, MK, p 111) Listen and fill in the gaps: The second effect is whether we think unfettered 1____ ________ alone can ensure the long term 2________ allocation of resources and long-term 3 ________ _______. Markets are very important, I’m not denying... Often economists talk about notions of 4 _______ _____ or the fact that markets are not working properly. free markets optimal economic growth market failure

6. What reasons does Michael Kitson give for government spending on education and health? Why don’t firms invest in early-stage technologies? How far do you agree with Kitson about these various forms of spending?

7. The Public Sector → RB, p 20 → RB, p 21, exercise II & IV HW, exercise III

8. Describe public goods using the following nouns/noun phrases: public sector consumption amount all individuals Describe merit goods using the following phrases: not available provided by the state standard of living V Explain the meaning of the following saying (R p 21): “The market has a keen ear for private wants and a deaf ear for public needs.”

9. All government spending has to be paid for by.... Taxation

10. Time to take a break! http://www.youtube.com/watch?v=YtksJEj2Keg

11. TAXATION, MK, U 22 Tax, n. (U C) Money that you have to pay to the government according to your income, property, goods etc. Tax, v. (T) to make a person or organization pay tax. E.g. The govt. taxed the shareholders on the dividends they receive. The shareholders get/are taxed on the dividends. (Longman Business English Dictionary)

12. CHOOSE THE RIGHT WORD 1.The main purpose of taxation is to raise / rise revenue for government spending. 2.Taxes also reduce / provide inequality through redistribition. 3.Taxes are decreased / levied for the purpose of repricing. 4.A consequential effect of taxation is representation (rulers tax / levy citizens, and citizens demand accountability from their rulers).

13. CHOOSE THE RIGHT WORD 1.The main purpose of taxation is to raise / rise REVENUE for government spending. 2.Taxes also reduce / provide inequality through REDISTRIBITION. 3.Taxes are decreased / levied for the purpose of REPRICING. 4.A consequential effect of taxation is REPRESENTATION (rulers tax / levy citizens, and citizens demand accountability from their rulers).

14. The Four “R”s Four main purposes of taxation Revenue, ____________, Repricing & Representation 1. Revenue: taxes r______ money to spend on public goods and g___________ functions (e.g. market regulation or legal systems).evenue 2. R____________. Transferring wealth from the richer sections of society to poorer sections. 3. Repricing. Taxes are l_________ to address externalities: tobacco is taxed, for example, to discourage smoking.Repricing 4. Representation. “No taxation w_________ representation!"Representation = rulers tax citizens & citizens demand accountability from rulers

15. The Four “R”s Four main purposes of taxation Revenue, Redistribution, Repricing & Representation 1. Revenue: taxes raise money to spend on public goods and government functions (e.g. market regulation or legal systems).evenue 2. Redistribution. Transferring wealth from the richer sections of society to poorer sections.Redistribution 3. Repricing. Taxes are levied to address externalities: tobacco is taxed, for example, to discourage smoking.Repricing 4. Representation. “No taxation without representation!“ = rulers tax citizens & citizens demand accountability from rulersRepresentation

16. COLLOCATIONS Who does what? levy a tax / evade a tax / collect a tax / impose a tax / avoid a tax / fill in a tax return / put sb. in a tax bracket / file a tax return / be exempt from tax / exploit a loophole / increase a tax / provide a tax relief/use a tax break / be liable to pay a tax GOVERNMENT TAXPAYER (TAX AUTHORITIES) Work in pairs to write min. 4 sentences with collocations. → MK, p 112 – Vocabulary

17. COLLOCATIONS Who does what? levy a tax / evade a tax / collect a tax / impose a tax / avoid a tax / fill in a tax return / put sb. in a tax bracket / file a tax return / be exempt from tax / exploit a loophole / increase a tax / provide a tax relief/use a tax break / be liable to pay a tax HW: write min. 8 sentences with collocations. → MK, p 112 – Vocabulary TAXPAYER GOVERNMENT (TAX AUTHORITIES) evade a tax, avoid a tax, fill in a tax return, file a tax return, be exampt from tax, exploit a loophole, use a tax break, be liable to pay a tax levy a tax, collect a tax, impose a tax, put somebody in a tax bracket, increase a tax, provide a tax relief

18. Vocabulary, MK p 112 1 income taxNote: flat rate of income tax 2 direct tax(the same for everybody) 3 progressive tax – the more you earn the more 4 indirect taxtax you pay 5 value-added tax Pls. Compare flat rate tax 6 capital gains tax with progressive tax 7 inheritance tax 8 wealth tax 9 tax evasion11 tax havens 10 tax avoidance12 a loophole

19. Taxation: Warren Buffet on taxation system in the USA http://www.youtube.com/watch?v=oi6BQLM4aqo&feature=related Watch and answer the question: Which types of taxes are mentioned in the programme? HANDOUT - Listen and fill in: LOOK UP THE FOLLOWING TERMS: –Hedge fund –Payroll tax –To revamp –To reap –preferential

20. Taxation http://www.youtube.com/watch?v=oi6BQLM4aqo&feature=related 1)wealthy9) shelters 2)percentage10) fund 3)rate11) hedge 4)inustice12) preferential 5)than13) higher 6)payroll14) income 7)average15) gains 8)paid16) in

21. HW: Structured notes comparing Galbraith and the Friedmans view of the role of the state Write a minimum of 8 sentences using collocations with the word “tax” (from slide 17) Watch the programme with W. Buffet again and get ready to make a comment (minimum 5 sentences) What’s your opinion about the taxation system in Croatia?