TAXES TRADE BARRIERS AND INTERNATIONAL ECONOMICS SSEMA 3
TAXES, TRADE BARRIERS, AND INTERNATIONAL ECONOMICS SSEMA 3 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. a. Define fiscal policy. b. Explain the government’s taxing and spending decisions. SSEIN 1 The student will explain why individuals, businesses, and governments trade goods and services. a. Define and distinguish between absolute advantage and comparative advantage. b. Explain that most trade takes place because of comparative advantage in the production of a good or service.
TAXES Progressive – larger percentage of highincome than lowincome Proportional – same percentage of income from all groups Regressive – larger percentage from lowincome than highincome Excise – tax on items being sold (also regressive, How? )
TAXES Social Security – pays for older citizens, surviving family members of wage earners, people with certain disabilities.
TRADE BARRIERS
BARRIERS TO TRADE Tariff – tax paid on imports Quota – limit the amount of a product that can be brought to a country legally Embargo – elimination of trade with people and business in a country Subsidy – Policy of reducing cost for produces - often to promote exports Standard – Prohibits or restricts sales of a product that does not meet certain requirements set by the government
INTERNATIONAL TRADE
VOCABULARY Trade – voluntary exchange of goods and services for money or other goods and services.
ABSOLUTE V COMPARATIVE ADVANTAGE Absolute Advantage – When somebody can produce a product more efficiently than somebody else Comparative Advantage – When somebody can produce a product at a lower opportunity cost than somebody else
WINNERS Tariff Quota Subsidy Winners Domestic Consumer X – Price is kept low Domestic Producer X – imports more expensive X – their product will be bought X – paid for making the good Foreign consumer X – prices kept low in home country X – Supply increases, decreasing price Foreign producer
LOSERS Tariff Quota X – less goods, prices higher X - less goods, prices higher X – sell fewer in country that imposed tariff X – sell fewer in country that imposed quota Subsidy Losers Domestic Consumers Domestic producers Foreign consumers Foreign producers X –price decreases in world market
- Slides: 10