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The ECONOMY

The ECONOMY. The ECONOMY - a system by which goods and services are produced, sold, and bought in a country or region. The ECONOMY . Who would ever think that a word with such a dull definition could be the source of contentious discussion, dispute and debate?.

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The ECONOMY

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  1. The ECONOMY

  2. The ECONOMY - a system by which goods and services are produced, sold, and bought in a country or region. The ECONOMY Who would ever think that a word with such a dull definition could be the source of contentious discussion, dispute and debate?

  3. When the ECONOMY is doing well citizens; find a job earn livable wages buy goods with cash and wise use of credit enjoy a high standard of living The ECONOMY BUT WHAT SYSTEM OR APPROACH IS MOST LIKELY TO SECURE THE ABOVE?

  4. Capitalism Socialism Competing Economic Systems

  5. Capitalism An economic / political philosophy that believes the government should distribute wealth and services equally the government should own institutions so that equal public access is allowed. • An economic / political philosophy that believes in small government and • Privately owned businesses • Wages determined by market forces • Profit motivation Socialism

  6. More Entertaining Definitions • CAPITALISM: You have two cows. You sell one and buy a bull. If you do this well, have some good luck, you can drink a lot of milk. • SOCIALISM: You have two cows. The state takes one (or at least the milk) and give it to someone else – determined to be in need of milk. • COMMUNISM: You have two cows, both owned by the government. The government gives you milk.  • FASCISM: You have two cows. State takes both of them, and gives/sells you milk, maybe, if you follow the party line.

  7. Anti- Capitalism View

  8. Anti- Socialism View

  9. TAXES There are only two things guaranteed in life; death and taxes. Both are unpleasant.

  10. Progressive: The tax is collected with consideration to your income. TYPES OF TAXES Regressive: The tax is collected without consideration to your income Flat: The tax is collected without consideration of deductions (#of children, mortgage interest …) nor your wealth.

  11. Progressive: Federal IncomeState IncomeRegressive:Property (Town)Sales (State) Other:Fees (State and Local) Penalties TYPES OF TAXES

  12. Federal Income Tax The NATIONAL government deducts money from your pay. State Income Tax: The STATE government deducts money from your pay. Progressive Income Tax National Income Tax Rate for 2011

  13. Sales Tax:States tax your purchases. This is sometimes referred to as a consumer tax. Regressive TaxesSales and Property Tax (and fees) Property Tax: The state and/or local government tax the worth of your home and car.

  14. State Sale Tax Rate for 2009

  15. Government Budgets / Services • Government taxes are collected to pay for government services (military, welfare, education …) • How much money (taxes) is needed depends in large part to how many government services the citizens are willing to pay for. • The relationship between all these factors determines the government’s budget and subsequent tax rate (how much money they need from citizens.) • When the government’s revenues (taxes) do not amount to the cost of services, they deficit spend. This is like taking a loan for the future which causes debt.

  16. National Government Expenses

  17. Anentitlement is the right to a particular privilege or benefit, granted by law or custom.  National Government ExpensesEntitlements • Entitlement government programs include: • Social Security • Medicare • Medicaid • Welfare

  18. Primarily a government pension program. • Created in 1935during the Great Depression. • Social Security is funded through payroll taxes. Social Security Looming Social Security Crisis

  19. Federally funded health care for citizens aged 65 or over • Created in 1965. • Medicare is funded through payroll deductions. Medicare Looming MedicareCrisis

  20. Government programs are expensive. • Funding these programs requires higher taxes. Deficit Spending andDebt • Raising taxes or cutting services makes government officials unpopular. • Perhaps related, often the government deficit spends(spend more $ than they collect.) • Deficit spending creates debt, with interest.

  21. The Rhode Island budget includes: • Education • Transportation • Health • Welfare • Protection • Pension State Government Expenses

  22. The North Kingstown budget includes: • Education • Police • Fire • Recreation • Government Local Government Expenses

  23. So, there are economic challenges in our society. How do we solve them? Conservatives vs. Liberals

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