Economics: Today and Tomorrow © 2008

Chapter 16: Government Spends, Collects, and Owes

Chapter Overviews

Section 1: Growth in the Size of Government
The government spending has increased over the years due to political decisions about the amount of goods and services should be allowed. Why this increase has happened and whether or not it is good or bad are discussed.

Section 2: The Functions of Government
The general purpose of government is: to protect individual rights, to promote a stable legal environment for economic activity, and to promote policies that support the general well being of all citizens. The government tries to accomplish its purpose by: providing public goods, promoting general welfare, and regulating economic activity, and ensuring economic stability.

Section 3: The Federal Budget and the National Debt
There are numerous steps involved in the federal budget-making process. As a result, deficit spending in the budget increases the national debt. The national debt is when the government expenditures exceed revenues collected, and the difference is financed through borrowing, which adds to the national debt.

Section 4: Taxation
The government has developed the principles and types of taxation. Taxes are classified as regressive, progressive, or proportional, depending on whether the tax as a percentage of income declines, increases, or remains the same as income increases.