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Unit 4 – Government Finances, The Global Economy
Goals – 7.06, 8.01, 9.02, 9.05, 9.06
Unit Essential Questions
1) How does the government try to influence the economy?
2) Why is free trade important?
3) What are some of the drawbacks of free trade?
Unit Pacing
Day 1

Economics Document – Unit 4, Part 1 – Fiscal Policy

Review Government Spending & Budgeting
Day 2

Notes - Principles & Types of Taxation
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IOUSA
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How Income Taxes Affect the Economy
Day 3
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Economics Document – Unit 4, Part 2 - The Global Economy

Review Free Trade & Protectionism
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Trade Agreements
Day 4
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Globalization
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Human Rights
Day 5
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Review: Government Finances & International Trade
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Test: Government Finances & International Trade
Unit 4 – Fiscal Policy, Globalization
NCSCOS 2.08, 3.08, 3.09, 5.05, 8.08, 9.07
Part 1 – Fiscal Policy
Chapter 25, Section 1 (pgs. 677-680)
Answer or Define the Following
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Who prepares the federal budget?
Who must approve the federal budget?
Mandatory Spending & example
Discretionary Spending & example
Appropriations Bill
Where does the federral government get its money?
Progressive Tax
Regressive Tax
Proportional Tax
What are the biggest expenses for the federal government?
What are the biggest sources of revenue for the Fed Gov?
Chapter 25, Section 2 (pgs. 682-685)
Answer the Following
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What is the largest source of state and local revenue?
What tax brings in the most money for the each government?
What is the largest expense for each government?
Which level is responsible for funding education?
What is intergovernmental revenue?
What are some major local government services?
What are entitlement programs?
Chapter 25, Section 3 (pgs. 688-692)
Answer the Following Questions
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When the government spends more money than it collects?
How does the federal government borrow money?
What is the national debt?
What is the current national debt?
What is a balanced budget?
What are (2) ways the government can try to reduce the debt?
Why is it sometimes necessary for the government to go into
deficit spending?
How Income Taxes Affect the Economy
Below you will find the 2008 Federal Income Tax Brackets. This shows the
percentage of tax that single and married citizens pay the federal government on their
income. Use the table below to do this sheet, and see how taxes impact the individual
and the economy as a whole. In doing the math, each part of your income is taxed as
it applies to the tax bracket. For example a single person earning $30,000 would pay
10% on the first $8,025 which is $802.50, and 15% on the remaining $21,975 which
is $3,296, for a total of $4,098.50 in federal income tax.
Use Single Bracket to calculate Income Tax amounts.
2008 Federal Income Tax Brackets
Tax Rate
Single
Married Filing Jointly
10%
Not over $8,025
Not over $16,050
15%
$8,025-$32,550
$16,050-$65,100
25%
$32,550-$78,850
$65,100-$131,450
28%
$78,850-164,550
$131,450-$200,300
33%
$164,550-$357,700
$200,300-$357,700
35%
Over $357,700
Over $357,700
Directions: Calculate the income tax paid using the single income bracket.
1) $40,000 2) $15,000 3) $60,000 4) $300,000 –
What might happen to the US economy if people were able to keep more of their
income? Tell how each of these areas would be impacted.
1) Demand for products and services
2) Unemployment
3) Savings Accounts
Part 2 The Global Economy
NCSCOS 7.06, 8.01, 9.02, 9.05, 9.06
Chapter 26, Section 1 (pgs. 707-713)
Answer the Following
What is an export?
What is an import?
What are the advantages of international trade?
How do some countries try to protect domestic industries?
Tariffs
Quotas
o What have countries enter into to reduce barriers to trade?
Free Trade Zones
NAFTA
EU
FTAA
WTO
o What are some issues critics have with the WTO?
o How can international trade be used as a political weapon?
Embargos
Trade Agreements
o Explain the following…
Balance of Trade (Trade Surplus, Trade Deficit)
Negative affects of a trade deficit
What does international trade increase?
Chapter 27, Section 1 (pgs. 735-738)
o What concerns has international trade created?
Environmental
Worker Expoitation
Internationalism
Chapter 27, Section 2 (pgs. 740-742)
o What is the United Nations (UN)?
o What has the United Nations done to address the following…
The Environment
Income Inequality
Chapter 27, Section 3 (pgs. 744-747)
o What is The Universal Declaration of Human Rights?
o What are International Tribunals?
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Barriers to Trade
(Arguments For and Against Free Trade)
Why impose trade barriers?
1)
Increase Employment & Stimulate Growth – Some nations erect
barriers to protect industries that are not efficient enough to compete in
international markets.
2)
Protect “Essential” Domestic Industries – Some countries want to
protect industries that are considered essential for national defense.
3)
Protect “Infant Industries” – Nations that are industrializing often
impose barriers to stimulate the development of “infant industries”.
4) Diversify the Economy – Some countries want to diversify their
economies so that they are not dependant on sales of a single product or
crop.
5) Protect Wages From “Cheap Foreign Labor” – Workers in highly
industrialized countries want to be protected from competition with goods
made by “cheap foreign labor”.
6) Retaliation Against Protectionism – Some countries want to get even
with, or retaliate against, nations that have imposed artificial barriers to
trade on them.
Types of Trade Barriers
1) Tariff (revenue, protective)
2) Quota
3) Trade Cartel
4) Embargo
Arguments For Free Trade
1) Competition = improved product quality.
2) Trade barriers damage export industries.
3) Specialization & comparative advantage lowers price.
NAFTA – North American Free Trade Agreement
Agreement between the United States, Mexico, and Canada.
US Positives
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Bigger economic pie – more customers.
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Leads to more efficient companies, thus consumers benefit.
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Better able to compete with imports from Asia by using Mexican
labor.
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Alleviate pressing social problems, such as illegal immigration
US Negatives
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Labor Unions argued that it would lead to loss of US jobs due to
cheap Mexican Labor.
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Environmental groups argued that the US may lower standards to
keep factories in the US.
Mexico Positives
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US is Mexico’s biggest market. Free trade allows products to be
cheaper in the US.
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Increase the flow of US capital and technology into Mexico’s
economy.
Mexico Negatives
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Labor unions argued that competing with US companies might cause
loss of jobs.
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Political leaders feared integration with US economy might cause a
loss of economic and political control.
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Farmers feared US agribusiness.
International Trade Quiz
1) A good bought from another country for domestic use.
2) A good sold to another country.
3) Free trade agreement between the US, Canada, and Mexico.
4) An international organization that settles trade disputes,
organizes negotiations, and provides help to developing countries.
5) A tax on an imported product.
6) A limit on the number of products that can be sold in a country.
7) An organization of countries that export the same product to
control the price and amount of the product available.
8) When a country does not trade at all with another country.
9) Provide one argument for free trade.
10) Provide one argument against free trade.
Unit 4 – Government Finances, International Trade Test Review
Test Format
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50 Multiple Choice
Info to Know
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budget – balanced budget, budget surplus, budget deficit
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national debt
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types of taxation (progressive, regressive, proportional)
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Federal Taxes (revenue) – income (#1 source), payroll,
social security, excise tax
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State Taxes (revenue) – intergovernmental revenue (#1 source), sales tax,
income tax
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Local Taxes – intergovernmental revenue (#1 source), property tax
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mandatory spending, discretionary spending
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fiscal policy, fiscal year
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Levels of Government – Major Services Provided Bonds
Info to Know
International Trade
- import
- export
- scarcity
- comparative advantage
- trade barriers (types,+,-)
- balance of trade
- free trade agreements (NAFTA, EU, WTO)
- Arguments For and Against Free Trade
- mixed economy, traditional economy
- developed, developing countries
- protectionism
- environmentalism
- immigration
- Goals
- Purpose
- Security Council
- globalization
- Universal declaration of Human Rights
- Tools to Fight Human Rights Violations