SOL 15 The student will apply social science skills to understand the role of government in the Virginia and United States economies by
Many public goods and services would not be available if they were not provided by the government.
Government-provided public goods and services benefit many but would not be available to everyone if individuals had to provide them.
Taxes and/or fees pay for the production of government-provided goods and services.
Examples of goods and services provided by the government
Reasons why government provides public goods and services
- describing the provision of government goods and services that are not readily produced by the market;
Many public goods and services would not be available if they were not provided by the government.
Government-provided public goods and services benefit many but would not be available to everyone if individuals had to provide them.
Taxes and/or fees pay for the production of government-provided goods and services.
Examples of goods and services provided by the government
- Infrastructure
- Public health and safety
- Public schools
Reasons why government provides public goods and services
- It is more efficient and not likely that the good or service would be provided by private individuals in the marketplace.
- The goods or services may benefit everyone, not only a purchaser.
- The value of the goods or services is greater than individual consumers could afford.
- It promotes economic equity.
b) describing government’s establishment and maintenance of the rules and institutions in which markets operate, including the establishment and enforcement of property rights, contracts, consumer rights, labor-management relations, environmental protection, and competition in the marketplace;
Political opinions differ about the role of government in a market economy.
Protecting the environment is a public service.
Property rights of an individual are relative and limited.
Contracts are legally binding.
The United States government creates laws and agencies to regulate production and exchange activities, conduct research, and establish guidelines for consumer rights and safety.
An important role for the government in the economy is to define, establish, and enforce property rights.
In a free market economy, markets need a backdrop of a rule of law, in which the government enforces contracts and protects property rights, to function well.
Individuals enter into agreements (contracts) with one another to buy and sell goods and services. Whether written or oral, these agreements are legally binding and can be enforced within the judicial system established by government.
The government can intervene in labor-management relations and can regulate competition in the marketplace.
To protect the environment, the government sets regulations and levies fees to ensure that the producer pays all costs resulting from polluting. The government can also subsidize pollution reduction efforts.
Examples of government agencies created to protect
- Consumers (e.g., Consumer Product Safety Commission regulates the safety of many products not covered by other agencies; the Food and Drug Administration regulates the safety of food, drugs, and cosmetics)
- Labor (e.g., Occupational Safety and Health Administration)
- The environment (e.g., Environmental Protection Agency)
c) investigating and describing the types and purposes of taxation that are used by local, state, and federal governments to pay for services provided by the government;
The governments of Virginia and the United States finance their operations through the taxes that are collected from individuals and corporations.
Different tax structures affect taxpayers differently and can be distinguished by whether the tax burden falls more heavily on those with higher or lower income levels.
Taxes and/or fees pay for the production of government-provided goods and services.
The power to tax is the first among the expressed powers of Congress.
Taxation is used to raise revenue; it is also used to regulate or discourage some activities.
Tax policies can also be used to encourage certain activities.
Income taxes paid by individuals and corporations are the largest single source of revenue today.
Types of taxes
A progressive tax takes a larger percentage of taxes from people in higher-income groups than from people in lower-income ones; the United States federal income tax is an example.
A proportional tax, also called a flat tax, is one in which the same tax rate is paid by people at all income levels. People who earn more pay more, but they pay the same percentage rate. Property tax is an example of a proportional tax.
A regressive tax applies in the same way to everyone, but the tax paid represents a larger share from lower-income groups than from higher-income groups. Sales tax is a regressive tax.
The governments of Virginia and the United States finance their operations through the taxes that are collected from individuals and corporations.
Different tax structures affect taxpayers differently and can be distinguished by whether the tax burden falls more heavily on those with higher or lower income levels.
Taxes and/or fees pay for the production of government-provided goods and services.
The power to tax is the first among the expressed powers of Congress.
Taxation is used to raise revenue; it is also used to regulate or discourage some activities.
Tax policies can also be used to encourage certain activities.
Income taxes paid by individuals and corporations are the largest single source of revenue today.
Types of taxes
- Individual income tax
- Corporate income tax
- Payroll taxes
- Customs duties
- Sales tax
- Real estate and personal property taxes
A progressive tax takes a larger percentage of taxes from people in higher-income groups than from people in lower-income ones; the United States federal income tax is an example.
A proportional tax, also called a flat tax, is one in which the same tax rate is paid by people at all income levels. People who earn more pay more, but they pay the same percentage rate. Property tax is an example of a proportional tax.
A regressive tax applies in the same way to everyone, but the tax paid represents a larger share from lower-income groups than from higher-income groups. Sales tax is a regressive tax.
d) analyzing how Congress can use fiscal policy to stabilize the economy;
Congress has a variety of fiscal tools for its use in influencing the economy.
Fiscal policy refers to how government taxing and spending policy can be used to influence the economy. In the short term, fiscal policy can be used to reduce the extremes of recession and inflation.
Fiscal policies are decisions by the federal government to change spending and taxation levels in order to influence national levels of output, employment, and prices.
Under conditions of slow growth or high unemployment, Congress can stimulate the economy by increasing federal spending and/or reducing taxes to promote more employment and output.
When inflation is growing too rapidly, Congress may slow the economy by decreasing federal spending and/or increasing taxes, which tends to lower price levels and interest rates.
Congress has a variety of fiscal tools for its use in influencing the economy.
Fiscal policy refers to how government taxing and spending policy can be used to influence the economy. In the short term, fiscal policy can be used to reduce the extremes of recession and inflation.
Fiscal policies are decisions by the federal government to change spending and taxation levels in order to influence national levels of output, employment, and prices.
Under conditions of slow growth or high unemployment, Congress can stimulate the economy by increasing federal spending and/or reducing taxes to promote more employment and output.
When inflation is growing too rapidly, Congress may slow the economy by decreasing federal spending and/or increasing taxes, which tends to lower price levels and interest rates.
e) describing the effects of the Federal Reserve’s monetary policy on price stability, employment, and the economy;
The Federal Reserve System serves as the United States’ central bank.
Monetary policies are decisions by the Federal Reserve System that lead to changes in the supply of money, short-term interest rates, and the availability of credit.
Monetary policies are decisions by the Federal Reserve System that lead to changes in the availability and cost of money and credit in order to promote price stability, full employment, and sustainable economic growth.
The Federal Reserve’s Open Market Committee is responsible for monetary policy decisions.
The Federal Reserve conducts monetary policy by buying and selling government securities to influence the money supply and interest rates.
In response to economic weakness, the Federal Reserve may implement monetary policy that helps to lower interest rates in order to stimulate employment and economic growth.
Conversely, in response to an overheating economy, the Federal Reserve may implement monetary policy that aims to increase interest rates in order to restrain inflation.
The Federal Reserve System serves as the United States’ central bank.
Monetary policies are decisions by the Federal Reserve System that lead to changes in the supply of money, short-term interest rates, and the availability of credit.
Monetary policies are decisions by the Federal Reserve System that lead to changes in the availability and cost of money and credit in order to promote price stability, full employment, and sustainable economic growth.
The Federal Reserve’s Open Market Committee is responsible for monetary policy decisions.
The Federal Reserve conducts monetary policy by buying and selling government securities to influence the money supply and interest rates.
In response to economic weakness, the Federal Reserve may implement monetary policy that helps to lower interest rates in order to stimulate employment and economic growth.
Conversely, in response to an overheating economy, the Federal Reserve may implement monetary policy that aims to increase interest rates in order to restrain inflation.
f) evaluating the trade-offs in government decisions.
Since economic resources are limited, the government must make choices about what it can and cannot fund.
A trade-off consists of giving up of one benefit or advantage in order to gain another regarded as more favorable.
A trade-off is not an all-or-nothing decision and is not always monetary.
When creating a new policy that requires funding, or evaluating an existing policy for funding, the government has to make choices to decrease resources from existing programs, raise taxes, or borrow money.
Since economic resources are limited, the government must make choices about what it can and cannot fund.
A trade-off consists of giving up of one benefit or advantage in order to gain another regarded as more favorable.
A trade-off is not an all-or-nothing decision and is not always monetary.
When creating a new policy that requires funding, or evaluating an existing policy for funding, the government has to make choices to decrease resources from existing programs, raise taxes, or borrow money.