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Unit 2 government and trade academic

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  • 3
  • Transcript

    • 1. Unit 2 - Academic Government and Trade
    • 2.
          • Federal Programs
            • Mandatory Spending (Entitlements)
              • Social Security ($644 billion)
              • i. Social Security has been expanded since 1935 to include disability benefits and Medicare.
              • ii. These benefit programs face financial problems with more recipients living longer.
              • b. Interest Payments ($260 billion)
            • Discretionary
              • Defense ($515 billion + 70 billion for War on Terror)
              • Education ($59.2 billion)
              • Art ($46 million)
              • Science ($24 billion including NASA)
              • Transportation ($11.5 billion)
              • In the 50’s & 60’s, the DOD received more than half the federal budget.
              • Defense now constitutes about one-sixth of all federal expenditures.
          • State and Local Government
            • Day to Day Expenses must be paid
            • Investments are made
            • Bonds are sold
            • State and local govt’s must balance the budget
            • Programs
              • Education
              • Transportation
    • 3. C. Fiscal Policy
          • 1. What is it?
            • Budget set for fiscal year (October 1 to September 30) to avoid elections
            • Office of Management & Budget (executive) and Congressional Budget Office (legislative) : make suggestions.
            • General Accounting Office keeps departments in check.
            • Each house has an Appropriations Committee
            • Incrementalism
              • The idea that last year’s budget is the best predictor of this year’s budget, plus some.
              • Agencies can safely assume they will get at least what they got last year.
              • Focus & debate on the increase over last year.
              • The budgets tend to go up a little each year.
          • 2. Expanding the economy
            • Increase Government Spending
            • Cut Taxes
    • 4.
          • 3. Contracting the economy
            • Increase Taxes
            • Decrease Spending
          • 4. Laissez Faire up till 1932
            • Invisible Hand
            • No government intervention
            • Supply and Demand
          • 5. Keynesian Economics from 1932-1981
            • Spend out of a recession
            • Used by most Developed nations.
          • 6. Supply-Side Economics (Reagan Era 1981 ---)
            • Taxation affects economy.
            • Laffer Curve proves that high taxes hurts the economy.
    • 5. D. Deficits and Debt
          • 1. Balancing
            • Expenditures: What the government spends money on.
            • Revenues: Sources of money for the government.
            • Surplus – making $ (Clinton)
            • Deficit – losing $ (most of the time) (now $407 billion)
            • Debt – overall losses (last paid off: Jackson)
            • Fiscal Conservatives have pushed for balanced budget amendment to Constitution
            • That would tie the gov’ts hands if there was an emergency
          • Debt
            • Interest payments make up about fifteen percent of budget.
            • World Crisis could bring doomed US economy if debt persists.
            • 2009 – $10.4 trillion
            • Average person’s share: $34,666
          • Borrowing
            • The Treasury Department sells bonds - this is how the government “borrows” money.
            • The federal debt is the sum of all the borrowed money that is still outstanding.
            • The government competes with other lenders.
            • Government does not have a capital budget.
    • 6.  
    • 7.  
    • 8. E. Partisan Spending
      • Republicans – Traditionally in favor of Laissez Faire.
      • Democrats – Keynesian economics, especially FDR.
      • Both parties try to outspend each other on the military.
      • Elected officials spend on special projects known as earmarks or parks in their communities to get re-elected.
    • 9. F. Taxes
      • Federal government uses IRS to collect wage taxes.
        • Social Security
        • Income
          • Shares of individual wages and corporate revenues.
          • The 16 th Amendment permitted Congress to levy an Income tax.
        • Progressive – percentage of income taken increases with your wealth.
        • Six brackets of Americans
        • 0 - $8,000 = 10%
        • $8,000-32 = 15%
        • $32,000-77= 25%
        • $77,000-160 = 28%
        • $160,000-350 = 33%
        • Over $350,000 = 35%
      • Flat – same percentage for everyone: 18% national, NO DEDUCTIONS!
      • Regressive: Percentage taken from income increases the poorer you get
        • Sales – state tax is 6%
        • National would be 23%
    • 10. G. How a Budget is Made
      • Federal departments & independent agencies submit budgets.
      • Office of Management & Budget (OMB) which is part of Executive Office of President, creates spending plan for exec branch.
      • Prez must submit budget by first Monday in Feb.
    • 11.
      • United States House & Senate Committees on Budget must finalize legislative procedure on budget.
      • This must be approved by a floor vote.
      • Both House & Senate must have similar bills, if not, approved by conference committee.
      • 13 appropriation bills are passed by their respective committees & on the floor following budget procedure OR one big budget bill called and Omnibus Spending Bill can be passed.
      • Bills must be identical from both houses, if not, they are resolved by a conference committee.
      • Congress will get advice from the Congressional Budget Office.
      • They must be signed by the president.
    • 12. Part 2 - International Economics
    • 13. A. Global Economy
        • Distribution
            • Not all nations have natural resources.
            • USA – rare minerals from Africa, oil from Mid-east
            • Following supply and demand, tech/labor is cheaper elsewhere.
            • If a country has a comparative advantage, then the domestic price will be below the world price, and the country will be an exporter of the good.
    • 14. B. Why we are Interdependent
        • Self-sufficiency/protectionism
          • Barriers
            • Import quotas.
            • Export restraints.
            • Tariffs
            • Results
              • Increased prices
              • Trade Wars
              • Both tariffs and import quotas . . .
              • raise domestic prices.
              • reduce the welfare of domestic consumers.
              • increase the welfare of domestic producers.
              • cause deadweight losses.
          • Protectionism
            • Jobs
            • National Security
            • Infant Industry
            • Unfair Competition
            • Protection-as-a-Bargaining Chip
    • 15.
          • 2. Cooperation
            • Free Trade - One of the few things Adam Smith believed the government should protect.
            • David Ricardo – nations with the lowest opportunity cost should produce a particular good or service.
            • Reciprocal Trade Act of 1934
            • World Trade Organization 1995
              • Ensures compliance with General Trade Agreements of Tariffs and Trade.
              • European Union
              • NAFTA – North American Free Trade Agreement
    • 16. C. Absolute and Comparative Advantage
      • Absolute advantage = those that can produce the most using the resources they have.
      • Comparative Advantage = producing the most with the smallest opportunity cost.
    • 17.
        • Positive Attributes
            • Receiving goods & services produced better abroad allow for cheaper prices, efficiency.
            • Domestic consumers of the good are better off
            • Trade raises the economic well-being of the nation as a whole.
            • Creates peace
            • Third World Nations have…
              • Higher employment
              • Larger tax base
              • Infrastructure
            • USA
              • World’s leading exporter.
              • Largest importer.
        • Negative Impact
            • Laborers disadvantages in low skill jobs, skilled or high tech jobs are and advantage.
            • International Corporations - Free trade has allowed international companies to exist that may dominate industries.
            • Domestic producers of the good are worse off.
            • Third World nations face…
              • Large companies with low wages
              • Pollution and labor hazards
              • Can be overwhelmed with cheap manufactured goods from developed nations.
    • 18. C. Classifying Development
          • 1. Levels
            • Developed, less developed
            • 1 st (demo) , 2 nd(Communist), 3 rd
            • Core, semi-periphery, periphery,
          • Measuring
            • GDP
            • Life expectancy
            • Infant Mortality Rate
            • Energy Consumption
    • 19. D. Banking and Loans
      • New Organizations are developed to help poor countries.
      • International Monetary Fund – monitors exchange rates and policies of nations.
        • President is a European
        • Has isolated inflation problems
        • Helps advise poorer nations fix economies.
      • World Bank – provides monetary assistance to developing nations.
        • President is always American
        • Loans to nations to build infrastructure
        • Is accused of setting unrealistic goals
    • 20. E. Africa
      • Pre-colonial stage saw exchange of minerals and resources for crafts and salt.
      • African elite sold slave labor to Arabs and Europeans.
      • Europe ignored direct contact until 19 th century.
    • 21. 4. Colonial or Imperial Era
      • British, Portuguese, Belgians, French, Spanish, and Germans divided continent.
      • Brutal oppression of kingdoms and tribes, sometimes with assistance of African elite.
      • Paternalistic approach taken, but really on by British.
      • French hoped to assimilate Africans.
      • Portuguese and Belgians used torture and mutilation to gain economic advantage.
      • Continent emptied of many valuables.
    • 22. 5. Independence
      • Some states retained independence (Liberia, South Africa, Egypt, Ethiopia).
      • WWII helped awaken self-determination.
      • Urban growth led to large concentration of labor, unions, and strikes.
      • Unrest led to riots in some colonies.
      • Britain attempted to guide states to independence such as in Ghana or Gold Coast.
      • France
        • Hoped to retain Africans until they became French too.
        • Prize colony was Algeria = part of France
        • Military torture was used to root out rebels.
        • Colonists and local military revolted when France decided to give up colony.
      • Belgium left the Congo without putting any effort into bettering the nation.
      • Portuguese brutally oppressed colonies until death toll was skyrocketing.
    • 23. 6. Aftermath
      • South Africa was left with decades of Apartheid and eventual equality and light manufacturing.
      • Saharan states like Libya and Egypt have oil wealth, but dictatorships.
      • Somalia, Sudan, and Ethiopia have weak governments, actual chaos.
      • Mineral wealth such as in the Congo leaves spoils for military juntas and corrupt leaders.
      • Little investment made due to risk
      • An attempt at African Union has been fruitless.
    • 24. E. China
      • Great Leap Forward – disaster, Mao thought having everyone producing steel was bad because.
        • It took workers from other industries.
        • They had little or no knowledge of making steel.
        • Different metals were melted down to make brittle, useless beams.
      • Post-Mao Zedong government has encouraged foreign investment and local control.
      • Rapid growth in GDP.
      • Rapid modernization.
      • Urban life is Westernized.
      • On the heel of USA as most powerful economy.
      • Owns large chunk of USA debt from purchasing bonds.
      • Negative
        • Pollution
        • Income gap (between rich and poor)
        • Homelessness
        • Rural poverty
        • Big swings in economic performance
    • 25. F. India
      • Growth due to cheap labor and strong education among advanced students.
      • English compatibility due to colonialism.
      • Technological advancements.
      • Negative
        • Caste system segregation
        • Hundreds of millions of poor
        • Slums next to skyscrapers.
        • Sprawling government and Hindu v. Muslim conflict.

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