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Economics 10-1

Economics 10-1. The Economics of Government Spending Pages 255-258. The Economics of Government Spending. Pages 255-258. ESSENTIAL QUESTION : What is the impact of government spending on the U.S. economy? What are the kinds of government spending?

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Economics 10-1

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  1. Economics 10-1 The Economics of Government Spending Pages 255-258

  2. The Economics of Government Spending Pages 255-258 • ESSENTIAL QUESTION: • What is the impact of government spending on the U.S. economy? • What are the kinds of government spending? • What factors affect the government’s spending decisions?

  3. The Economics of Government Spending Pages 255-258 GPS STANDARDS: SSEMA3- Explain how the government uses fiscal policy to promote…. [price stability, full employment, economic growth & social goals] b.) Explain the government’s…spending decisions

  4. Economics 10-1 • The Economics of Government Spending • Pages 255-258 • The role of the federal government has grown, making it a vital player in the economy. • Government is now big business in America. • In fact, all levels of government in the United States spend more than all privately owned businesses combined. • Government is a major player in our economy due to its enormous expenditures.

  5. Economics 10-1 • The Economics of Government Spending • Pages 255-258 • Between 1962 and 1993, federal transfer payments to people eligible for benefits because of poverty rose from under 1 percent of the nation’s Gross Domestic Product (GDP) to just about 2.5 percent. • In contrast, at the height of World War II (the early 1940s), federal spending on defense was 40 percent of GDP.

  6. Economics 10-1 • The Economics of Government Spending • Pages 255-258 • In 2001 the total government expenditures at all levels amounted to about 30 percent of GDP. • Total government expenditures at all levels was almost $3 trillion in 2003—about $10,300 for every American.

  7. Economics 10-1 • The Economics of Government Spending • Pages 255-258 • Government spending did not begin to increase until the 1940s for three reasons: • the high costs of World War II; • the Great Depression changed public opinion about the government assisting in everyday economic affairs and in improving Americans’ economic welfare • and the success of large-scale public works projects.

  8. Economics 10-1 • The Economics of Government Spending • Pages 255-258 • Debate continues over the role government should play in the economy. • Government promotes the broad social and economic goals of Americans, but the benefits of a government policy should outweigh its costs.

  9. Economics 10-1 • The Economics of Government Spending • Pages 255-258 • Government spending is for the purchase of goods and services and payments to disadvantaged Americans. • Goods and services that the government buys includes everything from tanks for the nation’s defense to paper and soap for its employees.

  10. Economics 10-1 • The Economics of Government Spending • Pages 255-258 • Transfer payments include: • Social Security • welfare • unemployment compensation

  11. Economics 10-1 • The Economics of Government Spending • Pages 255-258 • Two kinds of transfer payments exist: • If the payment is made from one level of government to another, it is called a grant-in-aid • Subsidies are payments made to individuals or entire industries to encourage or protect a certain economic activity.

  12. Economics 10-1 The Economics of Government Spending Pages 255-258

  13. Economics 10-1 FREE CHOICE FRIDAY Pages 255-258

  14. p. 255-258

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