1. Social Science

2. When the American public sees economic instability, they want action in order to feel secure again When the American public sees economic instability, they want action in order to feel secure again After World War II, soldiers coming home needed jobs, and many were fearful of another Depression After World War II, soldiers coming home needed jobs, and many were fearful of another Depression Congress passed the Employment Act of 1946, stating the government’s intentions to promote employment, production, and purchasing power Congress passed the Employment Act of 1946, stating the government’s intentions to promote employment, production, and purchasing power Act promotes full employment, or that every person who wants a job should have one Act promotes full employment, or that every person who wants a job should have one

3. When you include the government into the circular model, this is called a mixed economy When you include the government into the circular model, this is called a mixed economy Includes the private sector (market) and the public sector (government) Includes the private sector (market) and the public sector (government) Businesses pay federal and state taxes on their profits, which is used to provides services like highways and police protection Businesses pay federal and state taxes on their profits, which is used to provides services like highways and police protection Individuals also pay taxes, which is also used by the government to provide services Individuals also pay taxes, which is also used by the government to provide services

4. National Income Accounting is the process that our nation uses to keep track of our overall income and spending National Income Accounting is the process that our nation uses to keep track of our overall income and spending Includes data on how much businesses are producing, statistics on how much money Americans are earning, and how much of those earnings are saved or invested Includes data on how much businesses are producing, statistics on how much money Americans are earning, and how much of those earnings are saved or invested In measuring our national income, the total spending must equal the total income In measuring our national income, the total spending must equal the total income What is spent in the year’s GDP becomes income to those who produce the GDP What is spent in the year’s GDP becomes income to those who produce the GDP

5. When the GDP increases from one year to the next without major increases in prices, economic growth, or an increase in the production of goods and services, which provides citizens with a higher standard of living, occurs When the GDP increases from one year to the next without major increases in prices, economic growth, or an increase in the production of goods and services, which provides citizens with a higher standard of living, occurs One of the goals of our economy, along with employment and price stability One of the goals of our economy, along with employment and price stability Policy makers also try to avoid inflation, or an increase in price level, and deflation, or a decrease in price level Policy makers also try to avoid inflation, or an increase in price level, and deflation, or a decrease in price level

6. People constantly complain about taxes, yet people also need programs that the government provides People constantly complain about taxes, yet people also need programs that the government provides A good tax must be efficient, be backed up with good reason, must treat taxpayers fairly, must be certain, and paying must be simple and convenient A good tax must be efficient, be backed up with good reason, must treat taxpayers fairly, must be certain, and paying must be simple and convenient An important idea in tax fairness is the benefits-received principle, stating that the benefits of the tax should go to the people who pay the tax An important idea in tax fairness is the benefits-received principle, stating that the benefits of the tax should go to the people who pay the tax Another important idea in tax fairness is the ability-to-pay principle, which states that a citizen should show taxes in relation to his or her ability to pay Another important idea in tax fairness is the ability-to-pay principle, which states that a citizen should show taxes in relation to his or her ability to pay Relates to a person’s income Relates to a person’s income

7. There are three types of income taxes: There are three types of income taxes: Proportional tax-requires each taxpayer to pay the same proportion, or percentage, of their income in taxes Proportional tax-requires each taxpayer to pay the same proportion, or percentage, of their income in taxes Progressive Tax-takes a higher percentage of taxes from a person with a higher income than it does from a person with a lower income Progressive Tax-takes a higher percentage of taxes from a person with a higher income than it does from a person with a lower income Regressive Tax-takes a larger percentage of tax from the income of a person with a lower income than from a person with a higher incomes Regressive Tax-takes a larger percentage of tax from the income of a person with a lower income than from a person with a higher incomes sales tax is an example sales tax is an example

8. The effect of taxation and economic consequence in paying a tax is a controversial topic, and to understand, you must understand the kinds of taxes that are being discussed The effect of taxation and economic consequence in paying a tax is a controversial topic, and to understand, you must understand the kinds of taxes that are being discussed A direct tax is a tax on income A direct tax is a tax on income An indirect tax is part of the price a consumer pays for the product An indirect tax is part of the price a consumer pays for the product Included in the final price of each good purchased Included in the final price of each good purchased The impact of a tax is the financial burden of the consumer paying it, whether it be an individual purchasing an item or a business paying a tax The impact of a tax is the financial burden of the consumer paying it, whether it be an individual purchasing an item or a business paying a tax Can result in the increase of price for an item Can result in the increase of price for an item

9. In order to keep the economy strong and stable, the government sets up policies following these economic goals: In order to keep the economy strong and stable, the government sets up policies following these economic goals: To promote economic growth To promote economic growth To maintain stable prices To maintain stable prices To ensure full employment To ensure full employment Three types of budgets made through policies influence the economy: Three types of budgets made through policies influence the economy: Balanced Budget-requires that governments do not spend more than the tax revenues they receive Balanced Budget-requires that governments do not spend more than the tax revenues they receive Deficit Budget-a government spends more than the tax revenue it receives Deficit Budget-a government spends more than the tax revenue it receives Surplus Budget-occurs when a government spends less than it receives in tax revenues Surplus Budget-occurs when a government spends less than it receives in tax revenues The policies made on a budget depends on whether the economy is up or down The policies made on a budget depends on whether the economy is up or down

10. The Council of Economic Advisors makes an annual report to Congress, called the Economic Report of the President, making policy recommendations to stabilize the economy The Council of Economic Advisors makes an annual report to Congress, called the Economic Report of the President, making policy recommendations to stabilize the economy The federal government has two policy options that could help to stabilize the economy” The federal government has two policy options that could help to stabilize the economy” Increase or decrease taxes Increase or decrease taxes Increase of decrease government expenditures Increase of decrease government expenditures The federal budget is divided into two categories: The federal budget is divided into two categories: Direct purchase of goods and services Direct purchase of goods and services Transfer purchases, made to individuals for which no goods are being produced Transfer purchases, made to individuals for which no goods are being produced Most are entitlement programs, which provide benefits to people who are entitled by law to receive them Most are entitlement programs, which provide benefits to people who are entitled by law to receive them Example is Social Security Example is Social Security

11. Most state and local spending is direct expenditures, which depends on the demands of its citizens Most state and local spending is direct expenditures, which depends on the demands of its citizens When state and local governments suffer from reduced tax revenues, the public becomes upset due to project cutbacks When state and local governments suffer from reduced tax revenues, the public becomes upset due to project cutbacks State and local revenues comes from several taxes, mostly of sales and property taxes, and most of those taxes go into education State and local revenues comes from several taxes, mostly of sales and property taxes, and most of those taxes go into education