1. Section Outline 1 of 7 Government’s Role In Our Economy Section 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

2. 2 of 7 Government’s Role In Our Economy Section 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

3. The Nation’s Economic Health The federal government constantly checks the health of the economy. 3 of 7 Government’s Role In Our Economy Section 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

4. 4 of 7 Government’s Role In Our Economy Section 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

5. 5 of 7 Government’s Role In Our Economy Section 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

6. 6 of 7 Government’s Role In Our Economy Section 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

7. Government’s Role In Our Economy: Section 3 Section Reading Support Transparency 7 of 7