
The Federal government
collects money (_________)and
spends money (___________)

The government is important in our economy.


The circle graph shows that ALL LEVELS of government combined =______ GDP
GROSS DOMESTIC PRODUCT





Money collected in taxes is called ____________________
Money used to pay for goods and services is called _______________
If revenue = 2416 billion
Expenditures = 2700 billion
Which? Budget deficit
Budget surplus
circle




If revenue = 2700 billion
Expenditures = 2750 billion
Which? Budget deficit
Budget surplus
circle
Budget building process
______________
__________________
Budget Due: ______________
2.
1.
•
• Planes, tanks, ships
space shuttles
•
• capital goods for
schools and libraries.
welfare
•
Unemployment
compensation
•
Medicare
• office buildings
• land for parks
Social Security
Grant in Aid:
Payment from one level of
government to another (ex.
federal govt to state govt)
Example: interstate
highways: Fed govt pays
most and state pays rest

The government expenditures have grown
since the 1940s
◦ WWII
◦ Change in public opinion that government should
have a large role in everyday economic affairs.
◦ TVA, low cost electricity to people in the south in
the 1930s
Fiscal year: 12-month financial planning period
October 1-September 30
2 TYPES OF GOVERNMENT SPENDING
1.
Spending by law.
_________________
__________________
Social Security
Income Security
Medicare
Medicaid
Net interest on debt
2.
Spending that_____
_________________
National
Defense


The House discusses
Spending on National Defense
Discretionary
Spending
NATIONAL
DEFENSE
Various committees in the
House decide how to spend the
money and propose
appropriation bills. House votes
on bill.
The budget is reassemble and
voted on by the House and
Senate.


Mandatory
Spending
is not part of the annual budget process,
although Congress can deal with its separately.
____________
Money paid to
retired workers
______________Health care for
senior citizens
_______________Medical insurance
for low income
people
_______________
Food stamps
SSI
HUD housing
__________________
interest paid on $
government has
borrowed
________________
___________________:
Ex. Sales tax $ given
to local government
____________________
_______________
Retirement $ for
police, teachers,
highway workers
______________;
Cash assistance to
the poor
_____________:
Prisons
Parks
Roads
Snow removal
________________:
colleges
________________
Education
____________________
_______:
Police
fire
___________:
Traffic lights
Street lights
Water
Gas
electricity
___________
Roads
Snow removal
Salt for icy roads

Approving spending
◦ Some states have enacted a Balanced budget
Amendment, Which is a constitutional amendment
that requires that annual spending not exceed
revenue
◦ When revenue drops….NO MORE SPENDING
◦ A reduction in revenues may occur if sales tax or
state income tax fall because of a decline in general
level of economic activity


https://www.youtube.com/watch?v=gkJnmW
hin90
http://www.forbes.com/sites/realspin/2014/
04/15/passage-of-the-data-act-is-a-majoradvance-in-government-transparency/