Chapter 7 - The government sector. This chapter include objectives: Government spending, the graphing of the C + I + G line, types of taxes, the average and marginal tax rates, sources of government revenue, principles of taxation, the economic role of government. | Chapter 7 The Government Sector 7-1 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Objectives Government spending The graphing of the C + I + G line Types of taxes The average and marginal tax rates Sources of government revenue Principles of taxation The economic role of government 7-2 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction: The Growing Economic Role of Government Most of the growth over the past seven decades was due to the Depression and World War II Since 1945 the roles of government at the federal, state, and local levels have expanded The seeds of that expansion were sown during the Roosevelt administration The government exerts four basic influences It spends more than $ trillion It levies almost that amount in taxes It redistributes hundreds of billions of dollars It regulates our economy 7-3 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 7-4 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 7-5 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 2002 Proposed Spending by Category Budget of the United States Government , Fiscal Year 1999 7-6 State and Local Government Spending Main expenditures Education Health Welfare Spending is a little more than half the level of federal spending Police protection and prisons are now straining state and local budgets Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Government Purchases versus Transfer Payments The government spends $ trillion a year GDP = C + I + G + Xn Approximately half is “transfer payments” The largest transfer payment is social security These payments end up in the “C” part GDP Approximately half is “government purchases” The largest government purchase is defense These end up in the “G” part of GDP 7-7 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright 2002 by The McGraw-Hill Companies, Inc. . | Chapter 7 The Government Sector 7-1 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Objectives Government spending The graphing of the C + I + G line Types of taxes The average and marginal tax rates Sources of government revenue Principles of taxation The economic role of government 7-2 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction: The Growing Economic Role of Government Most of the growth over the past seven decades was due to the Depression and World War II Since 1945 the roles of government at the federal, state, and local levels have expanded The seeds of that expansion were sown during the Roosevelt administration The government exerts four basic influences It spends more than $ trillion It levies almost that amount in taxes It redistributes hundreds of billions of dollars It regulates our economy 7-3 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 7-4 Copyright 2002 by The .
