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Unit 2 Government and Trade
I.  Government
<ul><ul><ul><li>Federal Programs </li></ul></ul></ul><ul><ul><ul><ul><li>Mandatory Spending (Entitlements) </li></ul></ul>...
C.  Fiscal Policy <ul><ul><ul><li>1.  What is it? </li></ul></ul></ul><ul><ul><ul><ul><li>Budget set for fiscal year (Octo...
<ul><ul><ul><li>3.  Contracting the economy </li></ul></ul></ul><ul><ul><ul><ul><li>Increase Taxes </li></ul></ul></ul></u...
D.  Deficits and Debt <ul><ul><ul><li>1.  Balancing </li></ul></ul></ul><ul><ul><ul><ul><li>Expenditures: What the governm...
 
 
E.  Partisan Spending <ul><li>Republicans – Traditionally in favor of Laissez Faire. </li></ul><ul><li>Democrats – Keynesi...
F.  Taxes <ul><li>Federal government uses IRS to collect wage taxes.  </li></ul><ul><ul><li>Social Security </li></ul></ul...
Part 2 - International Economics
A.  Global Economy <ul><ul><li>Trade </li></ul></ul><ul><ul><ul><li>a.  Distribution </li></ul></ul></ul><ul><ul><ul><ul><...
B.  Trade <ul><ul><ul><li>Barriers </li></ul></ul></ul><ul><ul><ul><ul><li>Import quotas. </li></ul></ul></ul></ul><ul><ul...
C.  Development <ul><ul><ul><li>1.  Levels </li></ul></ul></ul><ul><ul><ul><ul><li>Developed, less developed </li></ul></u...
D.  Banking and Loans <ul><li>International Monetary Fund – monitors exchange rates and policies of nations. </li></ul><ul...
E.  Trade Makes Sense <ul><li>Absolute advantage = those that can produce the most using the resources they have. </li></u...
F.  Africa <ul><li>Pre-colonial stage saw exchange of minerals and resources for crafts and salt. </li></ul><ul><li>Coloni...
 
 
 
 
 
 
 
G.  China <ul><li>Great Leap Forward - disaster </li></ul><ul><li>Post-Mao Zedong government has encouraged foreign invest...
 
 
H.  India <ul><li>Growth due to cheap labor and strong education among advanced students. </li></ul><ul><li>English compat...
 
 
 
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Unit 2 government and trade general

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Transcript of "Unit 2 government and trade general"

  1. 1. Unit 2 Government and Trade
  2. 2. I. Government
  3. 3. <ul><ul><ul><li>Federal Programs </li></ul></ul></ul><ul><ul><ul><ul><li>Mandatory Spending (Entitlements) </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Social Security ($644 billion) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Interest Payments ($260 billion) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Discretionary </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Defense ($515 billion + 70 billion for War on Terror) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Education ($59.2 billion) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Art ($46 million) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Science ($24 billion including NASA) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Transportation ($11.5 billion) </li></ul></ul></ul></ul></ul><ul><ul><ul><li>State and Local Government </li></ul></ul></ul><ul><ul><ul><ul><li>Day to Day Expenses must be paid </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Investments are made </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Bonds are sold </li></ul></ul></ul></ul><ul><ul><ul><ul><li>State and local govt’s must balance the budget </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Programs </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Education </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Transportation </li></ul></ul></ul></ul></ul>
  4. 4. C. Fiscal Policy <ul><ul><ul><li>1. What is it? </li></ul></ul></ul><ul><ul><ul><ul><li>Budget set for fiscal year (October 1 to September 30) to avoid elections </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Office of Management & Budget (executive) and Congressional Budget Office (legislative) : make suggestions. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>General Accounting Office keeps departments in check. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Each house has an Appropriations Committee </li></ul></ul></ul></ul><ul><ul><ul><li>2. Expanding the economy </li></ul></ul></ul><ul><ul><ul><ul><li>Increase Government Spending </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Cut Taxes </li></ul></ul></ul></ul>
  5. 5. <ul><ul><ul><li>3. Contracting the economy </li></ul></ul></ul><ul><ul><ul><ul><li>Increase Taxes </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Decrease Spending </li></ul></ul></ul></ul><ul><ul><ul><li>4. Laissez Faire up till 1932 </li></ul></ul></ul><ul><ul><ul><ul><li>Invisible Hand </li></ul></ul></ul></ul><ul><ul><ul><ul><li>No government intervention </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Supply and Demand </li></ul></ul></ul></ul><ul><ul><ul><li>5. Keynesian Economics from 1932-1981 </li></ul></ul></ul><ul><ul><ul><ul><li>Spend out of a recession </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Used by most Developed nations. </li></ul></ul></ul></ul><ul><ul><ul><li>6. Supply-Side Economics (Reagan Era 1981 ---) </li></ul></ul></ul><ul><ul><ul><ul><li>Taxation affects economy. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Laffer Curve proves that high taxes hurts the economy. </li></ul></ul></ul></ul>
  6. 6. D. Deficits and Debt <ul><ul><ul><li>1. Balancing </li></ul></ul></ul><ul><ul><ul><ul><li>Expenditures: What the government spends money on. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Revenues: Sources of money for the government. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Surplus – making $ (Clinton) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Deficit – losing $ (most of the time) (now $1 trillion) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Debt – overall losses (last paid off: Jackson) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Fiscal Conservatives have pushed for balanced budget amendment to Constitution </li></ul></ul></ul></ul><ul><ul><ul><ul><li>That would tie the gov’ts hands if there was an emergency </li></ul></ul></ul></ul><ul><ul><ul><li>2. Debt </li></ul></ul></ul><ul><ul><ul><ul><li>Interest payments make up about fifteen percent of budget. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>World Crisis could bring doomed US economy if debt persists. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>2010 – $12 trillion </li></ul></ul></ul></ul>
  7. 9. E. Partisan Spending <ul><li>Republicans – Traditionally in favor of Laissez Faire. </li></ul><ul><li>Democrats – Keynesian economics, especially FDR. </li></ul><ul><li>Both parties try to outspend each other on the military. </li></ul><ul><li>Elected officials spend on special projects known as earmarks or pork barrel projects in their communities to get re-elected. </li></ul>
  8. 10. F. Taxes <ul><li>Federal government uses IRS to collect wage taxes. </li></ul><ul><ul><li>Social Security </li></ul></ul><ul><ul><li>Income </li></ul></ul><ul><li>Progressive – percentage of income taken increases with your wealth. </li></ul><ul><ul><li>Six brackets of Americans </li></ul></ul><ul><ul><li>0 - $8,000 = 10% </li></ul></ul><ul><ul><li>$8,000-32 = 15% </li></ul></ul><ul><ul><li>$32,000-77= 25% </li></ul></ul><ul><ul><li>$77,000-160 = 28% </li></ul></ul><ul><ul><li>$160,000-350 = 33% </li></ul></ul><ul><ul><li>Over $350,000 = 35% </li></ul></ul><ul><li>Flat – same percentage for everyone: 18% national, NO DEDUCTIONS! </li></ul><ul><li>Regressive: Percentage taken from income increases the poorer you get </li></ul><ul><ul><li>Sales – state tax is 6% </li></ul></ul><ul><ul><li>National would be 23% </li></ul></ul>
  9. 11. Part 2 - International Economics
  10. 12. A. Global Economy <ul><ul><li>Trade </li></ul></ul><ul><ul><ul><li>a. Distribution </li></ul></ul></ul><ul><ul><ul><ul><li>Not all nations have natural resources. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>USA – rare minerals from Africa, oil from Mid-east </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Following supply and demand, tech/labor is cheaper elsewhere. </li></ul></ul></ul></ul><ul><ul><li>Positive Attributes </li></ul></ul><ul><ul><ul><ul><li>Receiving goods & services produced better abroad allow for cheaper prices, efficiency. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>USA </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Third leading exporter. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Largest importer. </li></ul></ul></ul></ul></ul><ul><ul><li>Impact </li></ul></ul><ul><ul><ul><ul><li>Laborers disadvantages in low skill jobs. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Skilled or high tech jobs are an advantage. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>International Corporations - Free trade has allowed international companies to exist that may dominate industries. </li></ul></ul></ul></ul>
  11. 13. B. Trade <ul><ul><ul><li>Barriers </li></ul></ul></ul><ul><ul><ul><ul><li>Import quotas. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Export restraints. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Tariffs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Results </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Increased prices </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Trade Wars </li></ul></ul></ul></ul></ul><ul><ul><ul><li>Protectionism – isolate economy </li></ul></ul></ul><ul><ul><ul><li>Cooperation </li></ul></ul></ul><ul><ul><ul><ul><li>Reciprocal Trade Act of 1934 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>World Trade Organization 1995 </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Ensures compliance with General Trade Agreements of Tariffs and Trade. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>European Union </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NAFTA – North American Free Trade Agreement </li></ul></ul></ul></ul></ul>
  12. 14. C. Development <ul><ul><ul><li>1. Levels </li></ul></ul></ul><ul><ul><ul><ul><li>Developed, less developed </li></ul></ul></ul></ul><ul><ul><ul><ul><li>1 st (demo) , 2 nd(communist), 3 rd (poor) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Core, semi-periphery, periphery, </li></ul></ul></ul></ul><ul><ul><ul><li>2. Measuring </li></ul></ul></ul><ul><ul><ul><ul><li>GDP </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Life expectancy </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Infant Mortality Rate </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Energy Consumption </li></ul></ul></ul></ul>
  13. 15. D. Banking and Loans <ul><li>International Monetary Fund – monitors exchange rates and policies of nations. </li></ul><ul><ul><li>President is a European </li></ul></ul><ul><ul><li>Has isolated inflation problems </li></ul></ul><ul><ul><li>Helps advise poorer nations fix economies. </li></ul></ul><ul><li>World Bank – provides monetary assistance to developing nations. </li></ul><ul><ul><li>President is always American </li></ul></ul><ul><ul><li>Loans to nations to build infrastructure </li></ul></ul><ul><ul><li>Is accused of setting unrealistic goals </li></ul></ul>
  14. 16. E. Trade Makes Sense <ul><li>Absolute advantage = those that can produce the most using the resources they have. </li></ul><ul><li>Comparative Advantage = producing the most with the smallest opportunity cost. </li></ul><ul><li>Even though we make a good, it is wasteful for us to produce it. </li></ul>
  15. 17. F. Africa <ul><li>Pre-colonial stage saw exchange of minerals and resources for crafts and salt. </li></ul><ul><li>Colonial or Imperial Era </li></ul><ul><ul><li>Europe divided continent. </li></ul></ul><ul><ul><li>Racist paternalism, assimilation, or torture used to subdue natives. </li></ul></ul><ul><ul><li>African elite help reap natural resources. </li></ul></ul><ul><li>Independence </li></ul><ul><ul><li>WWII factories help organize Africans to strike, riot. </li></ul></ul><ul><ul><li>Some nations are free peacefully, others through brutal fighting. </li></ul></ul><ul><li>Aftermath </li></ul><ul><ul><li>Some infrastructure. </li></ul></ul><ul><ul><li>Weak or dictatorial governments. </li></ul></ul><ul><ul><li>Little investment. </li></ul></ul><ul><ul><li>Oil in north, minerals in center, light manufacturing in south. </li></ul></ul>
  16. 25. G. China <ul><li>Great Leap Forward - disaster </li></ul><ul><li>Post-Mao Zedong government has encouraged foreign investment and local control. </li></ul><ul><li>Rapid growth in GDP. </li></ul><ul><li>Rapid modernization. </li></ul><ul><li>Urban life is Westernized. </li></ul><ul><li>Negative </li></ul><ul><ul><li>Pollution </li></ul></ul><ul><ul><li>Income gap (between rich and poor) </li></ul></ul><ul><ul><li>Homelessness </li></ul></ul><ul><ul><li>Rural poverty </li></ul></ul><ul><ul><li>Big swings in economic performance </li></ul></ul>
  17. 28. H. India <ul><li>Growth due to cheap labor and strong education among advanced students. </li></ul><ul><li>English compatibility due to colonialism. </li></ul><ul><li>Technological advancements. </li></ul><ul><li>Negative </li></ul><ul><ul><li>Caste system segregation </li></ul></ul><ul><ul><li>Hundreds of millions of poor </li></ul></ul><ul><ul><li>Sprawling government and Hindu v. Muslim conflict. </li></ul></ul>
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