Review Sheet

Use the following slides to fill in your review sheet for your test on Friday

Individuals/Households:

own the resources used in production,

sell the resources for a paycheck,

and use the income to purchase goods and services.

Businesses/Producers:

buy resources (human, natural, capital, and entrepreneurship),

make products and sell them to individuals, businesses, and the government,

and use the profit to buy more resources.

The Government:

The government uses tax revenue (money) from individuals and businesses to provide public goods and services.

Saving and Investing Money

Individual and business savings provide financial capital that can be borrowed for business expansion (growth) and increased consumption.

THE THREE CHARACTERISTICS OF PUBLIC GOODS AND SERVICES:

1) Public goods/services provide benefits to many simultaneously.

2) They are provided by the government because individuals acting alone could not provide them as efficiently.

3) Therefore, they wouldn’t be available if we had to provide them ourselves.

The government produces public goods and services by…

using tax revenue from individuals and businesses to pay for them.

They also borrow funds from other countries.

The 16th Amendment authorizes Congress to tax personal & business incomes.

The effects of government taxing, borrowing, and spending:

TAXING LESS: ↓ TAX = ↑ MONEY TO SPEND

TAXING MORE: ↑ TAX = ↓ MONEY TO SPEND

BORROWING MORE: ↑ GOVERNMENT BORROWING =↓ BORROWING FOR US

BORROWING LESS: ↓ GOVERNMENT BORROWING =↑ BORROWING FOR US

The effects of government taxing, borrowing, and spending - continued:

SPENDING MORE: ↑ GOVERNMENT SPENDING = ↑ DEMAND, ↑PRODUCTION,

↑ EMPLOYMENT, AND ↑ TAXES SPENDING LESS: ↓ GOVERNMENT

SPENDING =↓ DEMAND, ↓ PRODUCTION,

↓ EMPLOYMENT, AND ↓ TAXES

A MIXED ECONOMY:PROMOTING COMPETITION

ANDPROTECTING CONSUMERS

3 Benefits of competition: 1. more variety 2. better quality 3. lower price

The government supports competition by-

1. enforcing antitrust legislation to stop monopolies.

antitrust- stopping one business from controlling a market

2. engaging in global trade 3. supporting new business

start-ups, which also provides more jobs.

The government regulates businesses by setting up agencies to oversee the way individuals and companies do business.

Environmental Protection Agency (EPA)- protects human health and the environment

Federal Communications Commission (FCC)- regulates communications by radio, television, and satellite

Federal Trade Commission (FTC)-protects consumers and promotes competition

THE GOVERNMENT PROTECTS CONSUMER RIGHTS BY:

Government agencies establish guidelines that protect public health and safety.

Negotiated contracts protect private ownership and are enforceable by law.

Consumers may take legal action against violations of consumer rights.