Download SUPER NOTES CHs 14-17

SUPER NOTES CHs
14-17
LOOK for the $-MONEY QUESTIONS
What Are Taxes?
Taxes are required
payments to local, state, or
national governments.
Taxes give the government
the money it needs to
operate.
Without taxes, we would not
have services we need such
as roads, education,
healthcare. police, etc.
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Who Pays What?
Federal and state taxes
are progressive taxes,
meaning that the richer
you are, the higher the
percentage you pay.
Sales tax is a regressive
tax, meaning the richer
you are, the less of a
percentage of income is
taken away.
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What Gets Taken
Out of Your Paycheck?
 Federal taxes (USA)
 State taxes (California)
 Local taxes $FICA: funds
(FICA)=Federal Insurance
Contributions Act
$1. Medicare: Health
insurance for 65 and over
$ 2. Social Security: old-age
and disability insurance.
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So How Do Local
Governments Get Money?
 $ Local governments
(like cities) mostly
get cash from
property taxes.
 In Eastvale, the
average property tax
per year is about
$8000.
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Entitlement Programs
 $ Entitlements are a social welfare program
providing benefits to people who meet certain
eligibility requirements.
 Examples: Social Security, Medicare, and
Medicade
Fiscal Policy
 Fiscal policy is the
use of government
spending and
revenue collection to
influence the
economy.
 One such example is
the $700 billion
Stimulus Package
that was passed by
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Affecting the Economy
 $ Expansionary policies are
policies that encourage growth or
expansion. They often involve
more government spending (like
stimulus) and tax cuts. Good for
recessions. $ Purpose is to
increase output.
 $ Contractionary policies are
policies that encourage slowing
down growth. They involve
decreasing government spending
and raising taxes.
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The Federal Reserve
 The Federal Reserve, or
Fed, is the nation’s central
bank that lends money to
banks when they need it.
 The Fed’s monetary policy
refers to the actions that
they take to influence the
GDP and rate of inflation in
the economy.
 $ The Fed alters their
monetary policy to lessen
the effects of the business
cycle.
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What does the Fed do?
 Serves the US
government as its bank
 Serves US banks
 Clears
and verifies
checks
 Supervises bank lending
practices
 Makes emergency loans
to banks
 Regulates Banks
 Regulates the money
supply
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The Fed’s Influence
 $ If the Fed wanted to encourage banks
to lend out more of their reserves to
Americans, they would reduce the
discount rate, or the rate they charge
banks to borrow money.
 The lower the interest rate, the more
demand there will be for money OR $
as interest rates decrease the
demand for money increases.
 $ If the Fed is fighting contraction
(slowdown in economic growth), they
will institute an easy money policy. In
other words, they will increase the
money supply in the US and encourage
investment.
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Major Trade Organizations
 Tariff: a tax placed on imported
goods (example: Toyota costs more
than Dodge)
 Some countries join together and ban
tariffs and trade restrictions between
them
 $ NAFTA: North American Free
Trade Agreement: will eliminate all
tariffs and other trade barriers
between Canada, Mexico, and the
United States.
 $ Most successful CUSTOM trade
union: European Union (EU)
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