UNIT 3 SSEMA 3 FISCAL POLICY TAXES MACROECONOMICS

UNIT 3 SSEMA 3: FISCAL POLICY & TAXES MACROECONOMICS SSEMA 3: FISCAL POLICY SSEMA 3: EXPLAIN HOW THE GOVERNMENT USES FISCAL POLICY TO PROMOTE PRICE STABILITY, FULL EMPLOYMENT, AND ECONOMIC GROWTH. A. DEFINE FISCAL POLICY. B. EXPLAIN THE EFFECT ON THE ECONOMY OF THE GOVERNMENT’S TAXING AND SPENDING DECISIONS IN PROMOTING PRICE STABILITY, FULL EMPLOYMENT, AND ECONOMIC GROWTH. C. EXPLAIN HOW GOVERNMENT BUDGET DEFICITS OR SURPLUSES IMPACT NATIONAL DEBT. The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Tax Quotes • Benjamin Franklin said, "The only things certain in life are death and taxes. " • "The hardest thing in the world to understand is the income tax. " -- attributed to Albert Einstein • "Give to Caesar what is Caesar's, and to God what is God's. “ Jesus • "People who complain about taxes can be divided into two classes: men and women. " – Unknown The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Taxes and Government Spending What are Taxes? • Tax – a required payment to a local, state, or national government The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Tax Structures 1. Proportional Tax – % of income taxes remains the same for all income levels (Flat tax) 2. Progressive Tax – % of income paid in taxes increases as income increases (Federal Income Tax) 3. Regressive Tax - % of income paid in taxes decreases as income increases (Sales Tax) The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Type of Tax Proportional Progressive Regressive Income of $10, 000 Income of $150, 000 Summary 10% flat tax = $1, 000 • 10% of income 10% flat tax = $15, 000 • 10% of income As income goes up, the percent of income taxed stays the same 10% income tax = $1, 000 • 10% of income 25% income tax = $37, 500 • 25% of income The more you make, the more they take. 6% State Sales Tax $5, 000 in consumer goods = $300 • . 03 or 3% of income 6% State Sales Tax $5, 000 in consumer goods = $300 • . 002 or. 2 % of income The more you make the less the tax affects you. The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Who Bears the Burden? Who bears the burden of each? 1. Proportional – everyone pays the same percentage • Everyone bears the burden 2. Progressive – “more you make, more they take” • Rich bear the burden. 3. Regressive – more you make, less they take • Poor bear the burden The student will explain how the government uses fiscal policy to

Regressive Tax A regressive tax is a tax where low income earners bear the burden. • Social Security tax is an example. • 6. 2% on wages up to a maximum wage of $118, 500. • Person A makes $30, 000 • $30, 000*. 062 = $1, 860 in taxes • $1, 860/$30, 000 = 6. 2% of wages. • Person B makes $200, 000 • $118, 500*. 062 = $7, 347 in taxes • $7, 347/$200, 000 = 3. 67% of wages. • Person C makes $500, 000 • $118, 500*. 062 = $7, 347 in taxes • $7, 347/$500, 000 = 1. 47% of wages. • Since the higher income earners pay the smallest percentage of their income in tax, it is a regressive tax. The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Individual Income Taxes $934. 00 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Individual Income Taxes • Tax Withholding – taxes are taken out of your pay before you receive it; ensures payment to the government The student will explain how the government uses fiscal policy to

Stossel Taxes http: //www. youtube. com/wat ch? v=_yad 01 i. Ov. I 4&list=PL 6 C 78 E 46 B 824 BFF 89&index=3& feature=plpp_video The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Tax Rates Explained • https: //www. youtub e. com/watch? v=2 R U 6 k. Hup. Y 50 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Obama Videos • Income Inequality • Joe the Plumber • You Didn’t Build That The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

• What is a regressive tax? As income goes up, % of tax goes down • What is an example of a regressive tax in the real world? Sales • Based on the above table, if each person paid $1, 000 worth of taxes, who is paying the highest percentage rate of taxes? Low income • Based on the above table, if each person paid $1, 000 worth of taxes, who is paying the lowest percentage rate of taxes? High income • Therefore, who is bearing the burden of the regressive taxes in our economy? Low income • Cory works at a fast-food restaurant. He makes $10, 000 a year. How much would he take home after paying $1, 000 regressive income tax? $9, 000 • What percentage of his income would be paid in taxes? 10% • How much would his boss, who makes $25, 000, take home? $24, 000 • What percentage of his boss’s income would be paid in taxes? 4% • Who is paying more, percentage-wise in taxes? Cory The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Suppose the state of Georgia mandates a fee for driver’s licenses of $25. Fill in the below table based on 2 people with different incomes. Income Amount of Tax Percent of income Paid in Tax $5, 000 $25 . 5% $50, 000 $25 . 05% Who is bearing the burden of this tax? Low income What alternative could the state use to make this tax system fairer? Charge high income earners a higher amount of tax for the driver’s licenses The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Income x percent of income paid in tax = amount of tax Example: $15, 000 x. 10 (10%) = $1, 500 Proportional taxes, 10% on all income Amount of Tax Percent of income Paid in Tax Income $5, 000 $10, 000 $25, 000 $50, 000 $100, 000 $1, 000 500 1, 000 2, 500 10% 5, 000 100, 000 10% 10% 10% What is a proportional tax? How do a proportional tax and a progressive tax differ? The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Taxes in a market economy • With the money Erin earned baby-sitting, she bought a book priced at $5. 95. She paid a tax of $. 36 on the book. What type of tax did she pay? Sales • Mr. Presutti paid taxes on his salary of $65, 000. What type of tax did he pay? Income • Jonah paid $3, 000 at the end of the year on his home. What type of tax did he pay? Property The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Who Fixes the Economy? The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Monetary and Fiscal Policy Making to Affect the Macroeconomy Monetary Policy Fiscal Policy The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Federal Government • How does the Federal Government fix problems? – Fiscal Policy • What are the Federal Government’s tools of fiscal policy? 1. Taxation 2. Government Spending The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Fiscal Policy and The Federal Budget • Fiscal Policy – Government spending/tax policies that influence the economy. – The goal is to create policies that will stabilize the economy • Main players : 1. Congress 2. The President The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

How Fiscal Policy Influences the Economy – Expansionary Fiscal Policy (grow the economy) 1. Government spends more 2. Taxes Less; gives consumers/firms more money to spend The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

How Fiscal Policy Influences the Economy – Contractionary Fiscal Policy (slow the economy) • Government spends less • Higher tax-rates will give consumers/firms less money The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

• Border Wall • http: //www. youtube. com/watch? v=9 WAZJFmp. Z 0&list=PL 6 C 78 E 46 B 824 BFF 89&index=24 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Budget Deficits and the National Debt • Balanced budget – money going into the U. S. Treasury is the same amount of money going out – Revenue = Spending – The last balanced budget occurred in 1997 under President Bill Clinton The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Balancing the Budget • Budget Surplus – occurs when the government takes in more than it spends – Revenue > Spending • Budget Deficit – occurs when the government spends more than it takes in – Revenue < Spending The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Dealing with a Budget Deficit • Reduce Spending – cut spending on government programs – Increase Taxes – Borrow money – government borrows money • China owns 1 trillion dollars of US debt The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

The National Debt • National debt – the total amount of money the federal government owes overall – Combination of all borrowing over time • Budget deficit – the amount of money the government owes to bondholders in one fiscal year The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

• http: //www. usdebtclock. org/ The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

IOUSA • http: //www. youtube. com/watch? v=lcb 0 h. MPG 5 S 0&list=PL 6 C 78 E 46 B 824 BFF 89 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Government Video • http: //www. youtube. com/watch? v=r. G 1 DUn 8 m. Mwk&list=PL 6 C 78 E 46 B 824 BF F 89&index=1&feature=plpp_video The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

China Video • http: //www. youtube. com/watch? v=r G 1 DUn 8 m. Mwk&list=PL 6 C 78 E 46 B 8 24 BFF 89&index=1&feature=plpp_vi deo The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Bumper sticker and Political Cartoon Assignment • • Design 2 bumper stickers – Choose one tax system that you support and one that you do not support. – Create a slogan and make sure to include one of the following terms in your slogan. 1. Progressive 2. Proportional 3. Regressive Draw a political cartoon that relates to Government Spending – Your theme must include 1 on of the following: – Expansionary fiscal policy, the government should spend more money. – Contractionary fiscal policy, the government should cut back on spending. – National Debt – total amount of money earned – Budget Deficit – overspending in one fiscal year Be Aggressive Go Progressive! Don’t Be Emotional, Be Proportional The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Fiscal Policy Expansionary/ Contractionary Explanation 1. The government cuts business and personal income taxes and increases its own spending. Expansionary • Lower taxes = Increased spending = Rise in GDP 2. The government increases the personal income, Social Security and corporate income tax. Contractionary • Higher taxes = Decrease spending = Fall in GDP 3. Government spending goes up while taxes remain the same. 4. The government reduces the wages of its employees while raising taxes on consumers and businesses. Expansionary Contractionary • Higher spending = Increase GDP • Decreased Spending and Increased Taxes = Fall in GDP The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Model of aggregate demand & aggregate supply Model used to explain the macroeconomy Aggregate - sum of all supply and demand in an economy Two axes: Economy's total output (stuff we produce) Average Price Levels(CPI) Price Level (CPI) Aggregate supply (Land, Labor, Capital, Entrepreneurship) PLE Aggregate demand (CIGNX) Y Quantity of Output The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Aggregate Demand Consumer Spending Government Spending Investment Spending Foreign Spending (x-m) The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Aggregate Demand Curve Aggregate-demand curve – Sum of C+I+G+NX (real GDP) at each price level – Downward sloping – Low price levels increase the quantity of goods and services, vice versa Price Level (CPI) Aggregate demand (AD) The student will explain how the government Quantity of Output uses fiscal policy to promote price stability, full

Aggregate Supply Capital Land Labor The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. Entrepreneur

The Aggregate Supply Curve • AS curve – total quantity of goods and services firms can produce and sell at any give price level • What shifts the curve? – Changes in Land, Labor, Capital The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

What Shifts the Aggregate Demand Curve? Price Level A B C Quantity of Output Situation Change in AD New AD Curve Congress cuts taxes C Business spending decreases A Government spending increases; no new taxes Survey shows consumer confidence jumps The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. C C

What Shifts the Aggregate Supply Curve? Price Level A B C Quantity of Output Situation Change in AS Drought hits American Southwest, Corn yields fall OPEC successfully increases oil prices Labor productivity increases dramatically Giant natural gas discovery decreases energy prices Computer technology brings new efficiency New AD Curve A A C C C Research shows that improved schools have C The skills student explainworkers how the government uses fiscal policy to promote price increased the of will American stability, full employment, and economic growth.

Aggregate Demand Consumer Spending Government Spending Investment Spending Foreign Spending (x-m) Aggregate Supply Capital Land Labor Entrepreneur The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Aggregate Demand or Supply? Aggregate Demand Aggregate Supply The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Aggregate Demand or Supply? Scenario 1. A factory 2. A printing press 3. A woman buys a hamburger for her child 4. A U. S. company sells a jet to a foreign country 5. A company builds a new factory 6. Trees 7. A corn field 8. A coal mine 9. Students purchase tickets for a football game 10. Two newlyweds buy a house AD or AS AS AS AD AD AD Buying (CIGNX) = AD Factor of Production = AS AS AD AD The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

AD AS Scenarios Price Level AS 1 AS Pe 1 Pe AD Y 1 Y The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. Quantity of Output

AD AS Scenarios 1. A significant increase in world oil prices 2. Government announces a large increase in spending on health and education 3. Average wage rises way above inflation for the third month running 4. Exchange rate appreciation knocks export hopes for manufacturing Price Level AS Pe 1 Pe AD Y Y 1 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. AD 1 Quantity of Output

AD AS Scenarios 1. A significant increase in world oil prices 2. Government announces a large increase in spending on health and education 3. Average wage rises way above inflation for the third month running 4. Exchange rate appreciation knocks export hopes for manufacturing Price Level AS 1 AS Pe 1 Pe AD Y 1 Y The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. Quantity of Output

AD AS Scenarios 1. A significant increase in world oil prices 2. Government announces a large increase in spending on health and education 3. Average wage rises way above inflation for the third month running 4. Exchange rate appreciation knocks export hopes for manufacturing Price Level AS Pe Pe 1 AD Y 1 Y AD 1 Quantity of Output The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

1. 2. 3. 4. 5. 6. AD AS Scenarios A significant increase in world oil prices Government announces a large increase in spending on health and education Average wage rises way above inflation for the third month running Exchange rate appreciation knocks export hopes for manufacturing US productivity levels at their highest level for 10 years A booming stock market leads to highest rate of retail sales in a century Price Level AS AS 1 Pe Pe 1 AD Y Y 1 Quantity of Output The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

1. 2. 3. 4. 5. 6. AD AS Scenarios A significant increase in world oil prices Government announces a large increase in spending on health and education Average wage rises way above inflation for the third month running Exchange rate appreciation knocks export hopes for manufacturing US productivity levels at their highest level for 10 years A booming stock market leads to highest rate of retail sales in a century Price Level AS Pe 1 Pe AD Y Y 1 AD 1 Quantity of Output The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Effects of Fiscal Policy Chart Scenario Expansionary/ Contractionary 1. National unemployment rate rises to 12% 2. Inflation is strong at a rate of 14% per year. 3. Surveys show consumers are losing confidence in the economy, retail sales are weak and business inventories are increasing rapidly 4. Business sales and investment are expanding rapidly, and economists think strong inflation lies ahead. Expansionary Contractionary Effect on Federal Budget Objective for Aggregate Demand Action on on Taxes Gov’t Spending Move toward a deficit Move toward a surplus The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. Effect on the National Debt

Summary of Monetary and Fiscal Policy Descriptor Monetary Policy Fiscal Policy Agency Federal Reserve Federal Government Structure 1 Central Bank, 12 Districts Head Official Janet Yellen President and Congress Barack Obama Focus Money Supply and Banking Federal Budget Tools for Policymaking OMOs, RRR, Interest Rates Expansionary Policy Contractionary Policy Buy bonds, lower RRR and Interest Rates Sell bonds, raise RRR and Interest Rates The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. Government Spending, Taxes Spend more, tax less Spend less, tax more

Chapter 15 Practice Worksheet 1. If a country’s central bank were to engage in activist stabilization policy, in which direction should it move the money supply in response to the following events? a. A wave of optimism boosts business investment and household consumption causing price levels to increase. • Decrease the money supply b. To balance its budget, the government raises taxes and reduces expenditures causing a slowdown in the economy. • Increase the money supply c. OPEC raises the price of crude oil causing people’s disposable income to reduce. • Increase the money supply d. The taste for the country’s products amongst the residents of other countries declines. • Increase the money supply The student will explain how the government uses fiscal policy to e. The stock market falls. promote price stability, full • Increase the money supply employment, and economic growth.

Chapter 15 Practice Worksheet 2. In which direction should the Federal Reserve move interest rates in response to the following events? a. A wave of optimism boosts business investment and household consumption causing price levels to increase. • Increase interest rates b. To balance its budget, the government raises taxes and reduces expenditures causing a slowdown in the economy. • Decrease interest rates c. OPEC raises the price of crude oil causing people’s disposable income to reduce. • Decrease interest rates d. The taste for the country’s products amongst the residents of other countries declines. • Decrease interest rates e. The stock market falls. • Decrease interest rates The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Chapter 15 Practice Worksheet 3. If policy makers were to use fiscal policy to actively stabilize the economy, in which direction should they move government spending and taxes? a. A wave of optimism boosts business investment and household consumption causing price levels to increase. • Decrease spending, increase taxes b. To balance its budget, the government raises taxes and reduces expenditures causing a slowdown in the economy. • Increase spending, decrease taxes c. OPEC raises the price of crude oil causing people’s disposable income to reduce. • Increase spending, decrease taxes d. The taste for the country’s products amongst the residents of other countries declines. • Increase spending, decrease taxes e. The stock market falls. • Increase spending, decrease taxes The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Daily Assignment Questions State and Local Taxes and Spending, pgs. 375 -376 1. What does a states operating budget pay for? List examples. 2. What does a state’s capital budget pay for? List examples 3. How do the state budgets differ from the federal government? 4. Where are taxes spent? List and describe each of the following: 1. 2. 3. 4. 5. 6. Education Public Safety Highways and Transportation Public Welfare Arts and Recreation The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. Administration

Flow Chart Types of Taxes, pgs. 365 -369 Types of Taxes Individual Income Taxes Corporate Income Taxes Social Security, Medicare and Unemployment Taxes Other Types of Taxes 1. Pay-As-You-Earn 1. Impact on Taxation Federal Budget 1. FICA 1. Excise Taxes 2. Tax Withholding 2. Deductions 2. Social Security 2. Estate Taxes 3. Progressive structure of Corporate taxes 3. Medicare 3. Gift Taxes 4. Unemployment Taxes 4. Import Taxes (Tariffs) 3. Tax Return 4. Taxable Income 5. Personal Exemptions 6. Deductions 7. Tax Brackets 5. Tax Incentive The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Flow Chart Types of Taxes, pgs. 365 -369 Types of Taxes Individual Income Taxes Corporate Income Taxes Social Security, Medicare and Unemployment Taxes Other Types of Taxes 1. Pay-As-You-Earn 1. Impact on Taxation Federal Budget 1. FICA 1. Excise Taxes 2. Tax Withholding 2. Deductions 2. Social Security 2. Estate Taxes 3. Progressive structure of Corporate taxes 3. Medicare 3. Gift Taxes 4. Unemployment Taxes 4. Import Taxes (Tariffs) 3. Tax Return 4. Taxable Income 5. Personal Exemptions 6. Deductions 7. Tax Brackets 5. Tax Incentive The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Consumers Expect a Recession Fall in AD – Prices fall, real GDP falls Foreign Income Rises Rise in AD – Prices rise, real GDP rises Foreign price levels fall Fall in AD – Prices fall, real GDP falls Th t poli full Government Spending Increases Rise in AD – Prices rise, real GDP rises Workers Expect Future Inflation, Negotiate Higher Wages Now Fall in AS – Prices rise, real GDP falls Technological Improvements Increase Productivity Rise in AS – Prices fall, real GDP rises

Economics Daily Ten The BEST example of a progressive tax in the United States is a. the federal excise tax on gasoline b. the Social Security tax c. the federal personal income tax d. state sales taxes The best example of a regressive tax in the US is a. the federal income tax b. sales tax c. Property tax d. State income tax The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Economics Daily Ten • Which of the following results when federal government spending is more than the federal government’s total revenue? a. a trade surplus b. a budget deficit c. a negative balance of payments d. a federal budget surplus The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Economics Daily Ten • If the US is running a deficit the fed govt can do which of the following to deal with the problem? a) raise taxes b) borrow money c) reduce spending d) reduce taxes The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Economics Daily Ten • What is the difference between a budget deficit and the national debt? a) The national debt is for 1 year b) A budget deficit is for all the years of borrowing c) A budget deficit is for 1 year, while the national debt is for all the years of borrowing d) The national debt is for 1 year, while a budget deficit is for all the years of borrowing The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

• Economics Daily Ten If the federal government is attempting to encourage spending by consumers and businesses, a fiscal policy BEST serving this purpose would be a. decreasing taxes b. decreasing government spending c. reducing the investment tax credit d. balancing the budget The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

• Economics Daily Ten Graph the following headlines: 1. U. S. consumer spending declines amidst economic woes 2. Government appropriates additional 50 million to states for education 3. A hurricane devastates US manufacturing The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Essential Questions • What is the difference between monetary and fiscal policy? Fed Monetary policy deals with decisions made by the ____, while fiscal policy the federal government. deals with decisions made by the ___________ • What is the difference between the national debt and a budget deficit? one year while national A budget deficit is earning less than you spend for ____, debt reflects ______________ all borrowing throughout U. S. history. The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

Daily Assignment Questions – Ch. 14 Section 1 pgs. 359 – 360 *Answer in complete sentences* 1. How did taxes affect early American colonists? 2. What gives the government the right to tax U. S. citizens? 3. What is the purpose of taxation? 4. What are some things that are provided by the government through revenue? 5. Where is the power to tax found in the Constitution? 6. What are the two limitations of taxes found in the taxation clause? 7. What is Congress unable to tax? 8. What is a tax base? 9. List the items that could be included in the tax base.

HOW MUCH WILL IT COST? To find the total City County If. State people sales tax in this tax only tax sales tax rate you If. Now There you Here find are is are the an in 2 B 3 Let’s 5% + learn 2% + how 3% = What is A-Town’s county applies want inside to buy ato willcities pay, add imaginary Town, biggest what stores in county this willthe in be in calculate 10% sales tax rate? aeverywhere city’s car, boundaries. they have in the 2 tax rates of an theimaginary the total county. sales state. tax county. What state. choices. is What B-Town’s is is the everywhere you Name rate? them. county What state taxare. are tax rate? taxrate? they? rate? The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

HOW MUCH WILL IT COST? Example: How much will you pay for a $50 shirt at Bigmart in A-Town? 1) ADD to find the tax rate: State tax 5 % County tax 2 % City tax + 2 % Total Tax 9 % The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

HOW MUCH WILL IT COST? Example: How much will you pay for a $50 shirt at Bigmart in A-Town? 2) MULTIPLY the tax by the price: $ 50 price x. 09 tax rate $4. 50 The tax on this shirt will be $4. 50. The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

HOW MUCH WILL IT COST? Example: How much will you pay for a $50 shirt at Bigmart in A-Town? 4) ADD the tax and the price to see the final cost: $ 50. 00 + 4. 50 54. 50 The shirt will cost $54. 50 at Bigmart in ATown. The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

HOW MUCH WILL IT COST? You try it: 1) A pair of headphones costs $10 at both Bigmart in A-Town and Hugemart in B-Town. What would you actually pay for the headphones at each store? In A-Town: Tax rate = 9% $10 x. 09 = 90 Tax = $0. 90 In B-Town: Tax rate = 10% $10 x. 10 = 100 Tax = $1. 00 The headphones will cost $10. 90 in A-Town and $11. 00 in B-Town. The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

HOW MUCH WILL IT COST? You try it: 2) Lisa is going to buy a new car! It costs $15, 000 at both A-Town Dealership and at Bob’s County Dealership. What would she actually pay for the car at each place? In A-Town: At Bob’s: Tax rate = 9% $15, 000 x. 09 = 1, 350 Tax = $1, 350. 00 Tax rate = 7% $15, 000 x. 07 = 1050 Tax = $1, 050. 00 The new car will cost $16, 350 in A-Town and $16, 050 at Bob’s. The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

HOW MUCH WILL IT COST? You try it: 3) A stereo costs $257 at the County Store and $250 at Hugemart in BTown. With taxes, what would you actually pay at each store? The stereo will cost $275 in B-Town and The County Store. $274. 99 at the County Store. In B-Town: At the County Store: Tax rate = 10% $250 x. 10 = 25 Tax = $25. 00 250 + 25 = $275 Tax rate = 7% $257 x. 07 = 17. 99 Tax = $17. 99 257 + 17. 99 = 274. 99 If it costs you $10 in gas to drive to Hugemart, at which store will the stereo end up costing you the least? The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

HOW MUCH WILL IT COST? You try it: 4) The state is tired of people putting gum under tables and chairs. It just put a $1 excise tax on each pack of gum! Gum used to cost $0. 75 at both Bigmart and Hugemart. Big art gem 5 Hu. 7 $1. 75 $0 The price goes up $1 per pack everywhere, so the new price will be $1. 75. $1. mart $0. 75 75 What will the new price tags say? The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK Your paycheck comes with a pay stub. The pay stub gives details about how much you earn and the taxes you pay. Check out the parts of Wanda Worker’s pay stub. The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 1. How much does Wanda earn per hour? The student will explain how the government uses fiscal policy to $12. 75

REALITY (PAY)CHECK 2. What are Wanda’s total earnings for the current pay period? $1, 020. 00 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 3. List the 4 kinds of taxes that are 1. Federal 2. Social Security taken out of Wanda’s check. 3. Medicare 4. State The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 4. Which tax had the least taken out? The most? Least: Medicare tax Most: Federal income tax The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 5. How much did Wanda pay in taxes this pay period? $188. 64 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 7. How much federal tax has Wanda paid so far this year? $1, 112. 40 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 8. What was Wanda’s gross pay during the current pay period? $1, 020. 00 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 9. Was Wanda’s entire gross pay taxable? Yes No The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK -taxes are taken out - actually The student will explain how the government uses fiscal policy to promote price stability, full receive employment, and economic growth. 10. The difference between gross pay and net pay is that gross pay is the amount a person earns before____ while net pay is the amount they

REALITY (PAY)CHECK 11. Wanda receives a check for which amount? Gross pay Net pay Taxable amount The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 12. What are the two pre-tax deductions that are taken out of Wanda’s check? Health insurance 401 k Retirement The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 13. Wanda paid $93 toward health insurance and retirement. Did she pay taxes on that $93? Yes No The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.

REALITY (PAY)CHECK 14. If Wanda’s state did not have an income tax, how much extra money would she have kept so far this year? $300. 36 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth.