39 terms

CE.13 Government and the Economy

ways the government promotes marketplace competition
- establishing and enforcing anti-trust legislation
- enacting policies that encourage global trade
- supporting business start ups
the purpose of anti-trust legislation
to discourage the development of monopolies
Federal Communications Commission
Security Exchange Commission
Federal Trade Commission
Government Agencies that regulate & promote competition in the marketplace
Public goods and services
goods and services provided by the government because individuals acting alone could not provide them efficiently
examples of public goods and services
- interstate highways
- public schools
- national defense
ways government pays for public goods and services
- tax revenue
- borrowed funds
- fees
- fines
main source of revenue for the government to pay for goods & services
taxes and fees
main source of revenue for federal government
income taxes
key source of revenue for state government
income & sales taxes
key source of revenue for local government
property & sales taxes
income tax
payments made by individuals & corporations based on income received
sales tax
a tax consumers pay on many items they purchase; it is a percentage of sale price
property tax
a tax levied on land & buildings and can also be levied on personal property such as boats & cars
federal government revenue pays for -
services such as national defense & homeland security, some medical expenditures (such as Medicare), payments to Social Security recipients and interest payments on the national debt
most state & local government revenue is spent on -
education, public health & welfare, road constructio & repair and public safety including police & fire departments
nation's central bank
Federal Reserve system
functions of the Federal Reserve system
- regulate banks
- provides financial services to banks & the federal government
- influences the money supply & interest rates in the economy
Why does the Federal Reserve regulate banks?
to help ensure the soundness of the banking system and the safety of deposits
Why is it important that the Federal Reserve influence the money supply & interest rates?
to keep inflation low and prices stable
The Federal Reserve system consists of -
a Board of Governors & 12 Federal Reserve Banks
how the chair of the Federal Reserve gets the position
appointed by the President & approved by the Senate
How does the government protect consumer rights & property rights, competition in the marketplace, labor & the environment?
by passing laws and creating agencies
property right
claim of legal ownership
What protects your right to own private property?
contracts which are enforceable by law
agencies that protect consumers
Food & Drug Administration
Consumer Product Safety Commission
agencies that protect labor
Occupational Health & Safety Administration
Equal Opportunity Employment Commission
agency that protects the environment
Environmental Protection Agency (EPA)
anything generally accepted as a method of payment for goods & services
money makes it easier to -
trade, borrow, save, invest and compare the value of goods & services
Why do people accept U.S. currency?
they have confidence in the government
money acts as:
- a medium of exchange, making trade easier
- a store of value, making it easier to save & invest
- a measue of value making it easier to compare the value of goods & services
three types of money
- coins
- Federal Reserve notes
- deposits in banks accounts accessed by checks and debit cards

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