Review Sheet Use the following slides to fill in your review sheet for your test on Friday
Individuals/Households: own the resources used in production, sell the resources for a paycheck, and use the income to purchase goods and services.
Businesses/Producers: buy resources (human, natural, capital, and entrepreneurship), make products and sell them to individuals, businesses, and the government, and use the profit to buy more resources.
The Government: The government uses tax revenue (money) from individuals and businesses to provide public goods and services.
Saving and Investing Money Individual and business savings provide financial capital that can be borrowed for business expansion (growth) and increased consumption.
THE THREE CHARACTERISTICS OF PUBLIC GOODS AND SERVICES: Public goods/services provide benefits to many simultaneously. They are provided by the government because individuals acting alone could not provide them as efficiently. Therefore, they wouldn’t be available if we had to provide them ourselves.
The government produces public goods and services by… using tax revenue from individuals and businesses to pay for them. They also borrow funds from other countries. The 16th Amendment authorizes Congress to tax personal & business incomes.
The effects of government taxing, borrowing, and spending: TAXING LESS: ↓TAX = ↑ MONEY TO SPEND TAXING MORE: ↑ TAX = ↓ MONEY TO SPEND BORROWING MORE: ↑ GOVERNMENT BORROWING =↓ BORROWING FOR US BORROWING LESS: ↓ GOVERNMENT BORROWING =↑ BORROWING FOR US
The effects of government taxing, borrowing, and spending - continued: SPENDING MORE: ↑ GOVERNMENT SPENDING = ↑ DEMAND, ↑PRODUCTION, ↑ EMPLOYMENT, AND ↑ TAXES SPENDING LESS: ↓ GOVERNMENT SPENDING =↓ DEMAND, ↓ PRODUCTION, ↓ EMPLOYMENT, AND ↓ TAXES
A MIXED ECONOMY:PROMOTING COMPETITIONANDPROTECTING CONSUMERS 3 Benefits of competition: 1. more variety 2.better quality 3. lower price
The government supports competition by- 1. enforcing antitrust legislation to stop monopolies. antitrust- stopping one business from controlling a market 2. engaging in global trade 3. supporting new business start-ups, which also provides more jobs.
The government regulates businesses by setting up agencies to oversee the way individuals and companies do business. Environmental Protection Agency (EPA)- protects human health and the environment Federal Communications Commission (FCC)- regulates communications by radio, television, and satellite Federal Trade Commission (FTC)-protects consumers and promotes competition
THE GOVERNMENT PROTECTS CONSUMER RIGHTS BY: Government agencies establish guidelines that protect public health and safety. Negotiated contracts protect private ownership and are enforceable by law. Consumers may take legal action against violations of consumer rights.