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Unit 2 government and trade general

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  • 1. Unit 2 Government and Trade
  • 2. I. Government
  • 3.
        • Federal Programs
          • Mandatory Spending (Entitlements)
            • Social Security ($644 billion)
            • 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)
        • 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
  • 4. 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
        • 2. Expanding the economy
          • Increase Government Spending
          • Cut Taxes
  • 5.
        • 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.
  • 6. 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 $1 trillion)
          • 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
        • 2. Debt
          • Interest payments make up about fifteen percent of budget.
          • World Crisis could bring doomed US economy if debt persists.
          • 2010 – $12 trillion
  • 7.  
  • 8.  
  • 9. 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 pork barrel projects in their communities to get re-elected.
  • 10. F. Taxes
    • Federal government uses IRS to collect wage taxes.
      • Social Security
      • Income
    • 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%
  • 11. Part 2 - International Economics
  • 12. A. Global Economy
      • Trade
        • a. 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.
      • Positive Attributes
          • Receiving goods & services produced better abroad allow for cheaper prices, efficiency.
          • USA
            • Third leading exporter.
            • Largest importer.
      • Impact
          • Laborers disadvantages in low skill jobs.
          • Skilled or high tech jobs are an advantage.
          • International Corporations - Free trade has allowed international companies to exist that may dominate industries.
  • 13. B. Trade
        • Barriers
          • Import quotas.
          • Export restraints.
          • Tariffs
          • Results
            • Increased prices
            • Trade Wars
        • Protectionism – isolate economy
        • Cooperation
          • 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
  • 14. C. Development
        • 1. Levels
          • Developed, less developed
          • 1 st (demo) , 2 nd(communist), 3 rd (poor)
          • Core, semi-periphery, periphery,
        • 2. Measuring
          • GDP
          • Life expectancy
          • Infant Mortality Rate
          • Energy Consumption
  • 15. D. Banking and Loans
    • 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
  • 16. E. Trade Makes Sense
    • Absolute advantage = those that can produce the most using the resources they have.
    • Comparative Advantage = producing the most with the smallest opportunity cost.
    • Even though we make a good, it is wasteful for us to produce it.
  • 17. F. Africa
    • Pre-colonial stage saw exchange of minerals and resources for crafts and salt.
    • Colonial or Imperial Era
      • Europe divided continent.
      • Racist paternalism, assimilation, or torture used to subdue natives.
      • African elite help reap natural resources.
    • Independence
      • WWII factories help organize Africans to strike, riot.
      • Some nations are free peacefully, others through brutal fighting.
    • Aftermath
      • Some infrastructure.
      • Weak or dictatorial governments.
      • Little investment.
      • Oil in north, minerals in center, light manufacturing in south.
  • 18.  
  • 19.  
  • 20.  
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  • 23.  
  • 24.  
  • 25. G. China
    • Great Leap Forward - disaster
    • Post-Mao Zedong government has encouraged foreign investment and local control.
    • Rapid growth in GDP.
    • Rapid modernization.
    • Urban life is Westernized.
    • Negative
      • Pollution
      • Income gap (between rich and poor)
      • Homelessness
      • Rural poverty
      • Big swings in economic performance
  • 26.  
  • 27.  
  • 28. H. 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
      • Sprawling government and Hindu v. Muslim conflict.
  • 29.  
  • 30.  
  • 31.