Unit 7: Government Policy and Taxation

Unit Description

This unit focuses on the role of the government in a market economy in establishing fiscal and taxation policy.

Student Understandings

Students understand that government impacts an economic system as producer, employer, and consumer. Students understand that there is a debate among scholars about how involved the government should be in the American economy. Students understand that government establishes economic policies for the purpose of regulating economic behavior. Students learn that government is financed through various forms of taxation. Students learn how tax policy affects the U.S. economy.

Guiding Questions

  1. Can students identify the purpose and importance of different types of taxes and how they impact individuals and businesses?
  2. Can students explain how and why government intervention has an effect on the economy?
  3. Can students explain how federal spending and taxation are related to budget deficits, national debt and surpluses?
  4. Can students identify the instances when government must step in and provide goods and/or services that will not be produced in the free market?
  5. Can students distinguish between fiscal and monetary policy and explain the role of government policy on the economy?

Unit 7 Grade-Level Expectations (GLEs)

GLE # / GLE Text and Benchmarks

Economics: Fundamental Economic Concepts

18. / Explain the role of government as producer, employer, and consumer in economic systems (E-1A-H6)

Individuals, Households, Businesses, and Governments

33. / Identify various forms of taxation (E-1B-H3)
34. / Describe the impact of given forms of taxation (E-1B-H3)
35. / Analyze the effects of governmental action or intervention in a market economy (E-1B-H3)
36. / Describe major revenue and expenditure categories and their respective proportions of local, state, and federal budgets (E-1B-H3)
37. / Predict how changes in federal spending and taxation would affect budget deficits and surpluses and the national debt (E-1B-H3)
38. / Evaluate the impact of policies related to the use of resources (e.g., water use regulations, policies on scarce natural resources) (E-1B-H3)

The Economy as a Whole

60. / Explain factors contributing to unequal distribution of income in a market economy (E-1C-H3)
62. / Distinguish monetary policy from fiscal policy (E-1C-H4)
64. / Explain the role of regulatory agencies in the U.S. economy (E-1C-H4)

Chapter 14Chapter 15

TaxFiscal Policies

RevenueFederal budget

Individual income taxOMB and CBO

Sales taxAppropriations bill

Property taxExpansionary fiscal policy

Proportional taxContractionary fiscal policy

Progressive taxClassical economics

Regressive taxKeynesian economics

WithholdingDemand-side economics

Tax returnSupply-side economics

Taxable incomeMultiplier effect

Personal exemptionAutomatic stabilizer

DeductionsBalanced budget

Social securityBudget surplus

MedicareBudget deficit

Estate taxNational debt

Gift tax

Tariff