EPF: Module 12 Presentation

Module 12

Macro/Micro/
Fiscal Policy

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02

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No School

Shark Tank

Shark Tank

Fiscal Policy

Flex Friday - Fiscal

Policy

Module 10: To-Do

No School for

Students

01

Shark Tank

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Economics and Personal
Finance

Lesson Essential Question:

How can we present an understanding
of the market through our business
plans/shark tank presentations?

Overview

01

SSR: 15 minutes

02

Shark Tank Presentations

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04

Schedule for the day

Shark Tank/Fiscal

Policy

03

Economics and Personal
Finance

Lesson Essential Question:

What is the role of inflation in the
economy and how the Consumer Price
Index (CPI) is used to measure this
indicator. What is the business cycle
and market saturation points? What
are various economic indicators
including GDP, unemployment, poverty
level/standard of living, labor market,
and unemployment?

Overview

01

SSR: 15 minutes

02

Shark Tank Project

03

04

Schedule for the day

What are Economic

Indicators?

Any data that provides information on

the current and future economic

health of a society

What are some of the main indicators?

Key Economic Indicators (there are

many more)

● Gross Domestic Product (GDP)
● Consumer Price Index (CPI)
● Labor Market & Unemployment
● Federal Reserve (FED) Rates
● National Debt

Multiple Choice

Which of the following are some key economic indicators? (Select all that apply.)

• GDP

• Consumer Price Index

• Federal Reserve Rates

• National Debt

Key Economic Indicators

● Gross Domestic Product (GDP)

GDP

Is an economic snapshot of a country,

used to determine the size of its

economy and growth rate.

How does GDP get calculated?

GDP is calculated by

adding up all of the money spent by
consumers, businesses, and the
government in a given period.

How does the U.S. stack up against the
world? Go to Canvas “Real GDP growth”

Open Ended

In your own words, explain the concept of GDP and how it is calculated.

Consumer Price Index

(CPI)

What is this?

An index or “indicator” that measures the
monthly change in prices paid by consumers.

Consumer Price Index

(CPI)

is a measure of the average change over time in the
prices paid by urban consumers for a market basket

of consumer goods and services. Indexes are

available for the U.S. and various geographic areas.

Website Links

The following websites allow you to see how
the CPI is measured and calculated:

● 12 Month Inflation Change (CPI)

● CPI for Urban Consumers

● CPI and PCE - FRED Data

● CPI Historical Data (**)

Open Ended

In your own words, what is the consumer price index?

Does the Value of Money
Stay the Same over Time?

The simple answer is… NO!

Why???

Inflation

Or… put another way… the
buying power of a currency.

Inflation measures how
much more expensive a set
of goods and services has
become over a certain
period, usually a year.

Website Links

The following websites allow you to see how
inflation has affected the cost of goods and
services over a period of time. Let’s take a
peek. What do you notice?

● Inflation Calculator

● Inflation 101 (Federal Reserve Bank of Cleveland)

● The Cost of Goods the Year You Were Born (**)

Open Ended

Take five minutes to access the inflation calculator on our Canvas page. How has the cost of a dollar risen in the past 10 years? What kind of impact might that have on day to day life?

Unemployment

How is unemployment measured?

Unemployment rate

The unemployment rate represents the number of

unemployed people as a percentage of the labor force (the

labor force is the sum of the employed and unemployed).

The unemployment rate is calculated as: (Unemployed ÷ Labor

Force) x 100.

What is the current unemployment rate in the US?

Open Ended

Take a second to Google - what is the United States' current unemployment rate? What was the unemployment rate in 2008? How about in 1932?

Federal Reserve (Fed)

Rates

The U.S. central banking system—the Federal Reserve, or the
Fed—is the most powerful economic institution in the United

States, perhaps the world. Its core responsibilities include

setting interest rates, managing the money supply, and

regulating financial markets.

The Chair and Vice Chairs of the Fed are
appointed by the President of the US.

Open Ended

What is the current Federal Reserve interest rate? What impact does interest rates have on us as consumers?

National Debt

•The national debt is all of the money the
federal government has borrowed over
the years and has not paid back.

What is the current national debt?

Below is the website that shows current up to the second national debt.

http:www.usdebtclock.org

The National Debt Clock is a live billboard that

displays current United States gross national debt
and the amount that each American family owes.

It was created by the New York real estate

developer Seymour Durst in 1989 who wanted to
highlight the rising national debt. It is currently

installed on in Manhattan, New York City.

The National Debt Clock

Open Ended

What is the United States' current national debt?

Today, our deficits are caused mainly by
predictable structural factors: our aging
baby-boom generation, rising healthcare costs,
and a tax system that does not bring in enough
money to pay for what the government has
promised its citizens.

Shark Tank/Fiscal

Policy

03

From Whom Does the Federal Government Borrow

Money?

The federal government borrows money from many
different sources:

1)
Individual citizens.

2)
Foreign governments

3)
Itself

Money is loaned to the federal government by people or other countries buying
U.S. securities, which are bonds or IOUs.

The Top Ten Countries that Hold U.S. Debt

Country

The Amount Loaned to the

U.S in Billions of Dollars

China

1255

Japan

1149

Brazil

255

Ireland

233

Switzerland

226

United Kingdom

210

Hong Kong

197

Luxembourg

188

Taiwan

178

Belgium

139

Which
Countries
Loan the

U.S. Money?

How does the Government Borrow from itself?

● The main method is by taking money from trust funds like Social Security and promising to pay it

back later.

Currently, the federal government owes
the Social Security trust over 2.7 trillion

dollars

Open Ended

Who does the government borrow money from? How does the govt. borrow money?

Monetary Policy

A set of tools used by the nation’s central
bank to control the overall money supply

and promote economic growth.

How is the government involved?

Role of Government

The role of the government in economic growth
can be very tough because of the civic, political,

and economic ideas.

The Federal Budget

What is a BUDGET and Why Are They Important?

●A budget is a plan for spending and saving.

●A budget ensures that there is enough money for the

things that are needed and the things that are
considered important.

What is the Federal Budget?

● The Federal Government is required to create a budget once a year.

The federal budget covers a fiscal year, which is one year or 12 months.

● The Federal budget tries to estimate how much money that government will take in and how much it

will spend for the year.

How is the Federal Budget Created?

● The budget is created through a long negotiation process between the President’s office and

Congress

The President’s office and the different political parties in congress all
fight to fund their desired programs

● Eventually, one budget is drafted and voted on by Congress.

The President can accept the final budget by signing it or reject it by
vetoing.

The federal budget is massive and is over 2200
pages long.

Open Ended

In your own words, how is the federal budget created?

Where does the Federal Government Obtain its

Revenue (income)?

The federal government obtains its revenue from taxes and
fees.

A. Three main sources of revenue are:

1)
Individual income taxes.

(This the largest; makes up over 49% of all federal revenue)
1)
Payroll taxes.

2)
Corporate income taxes.

The federal government brings in an enormous amount of revenue
each year. For 2018, it brought in about 3.33 trillion dollars.

Multiple Select

Where does the government obtain its revenue? (Select all that apply.)

• Individual income taxes

• Graft/Corruption

• Payroll taxes

• Corporate income taxes

What are the Federal Government Expenses

(Bills)?

● The federal government has a lot of expenses and are divided into two categories; Mandatory

spending and Discretionary spending.

MandatorySpending

is required to fund programs such
as Social Security, Medicare, and
other programs created in the past.
Mandatory spending eats up most
of the budget, close to 70 percent.

Discretionary Spending

is flexible spending; itpays
for running the government
and new programs.

The two largest expenses are health
programs (Medicaid and Medicare)
and Social Security payments. These

two areas account for more than
fifty percent of the federal budget
and are growing at a rapid pace.

The total expenses of the

federal government for fiscal
year of 2018 was close 4.109

trillion dollars.

Open Ended

What did the U.S. spend the most money on in 2023? What does the United States' spending say about its values as a country?

What is a BALANCED BUDGET?

●Is when revenues (money coming in) is the same as or

equals expenses (money going out to pay bill)

a. The key to a healthy budget is to balance revenues
(money coming in) with expenses (bills).

The Federal Budget

Deficits, Surpluses, and the National Debt

What are Federal Budget Deficits and

Surpluses?

A budget can be balanced or it can have a
surplus or a deficit.

Budget Surplus =

Having a surplus in a budget means
that after all expenses are paid there
is money left over to place into
savings. Surpluses are very healthy
to have.

Budget Deficit =

is a shortfall; it is when you don’t have enough
revenue (money coming in) to pay all of the
expenses (bills).

Having a deficit means you will need to borrow
money to pay your bills. Borrowing money causes
you to have debt.

Does the Federal Government Run Surpluses

or Deficits Each Year?

● The federal government has a history of creating poor budgets

and has been running huge deficits (spending more than it brings
in) for years.

● Each time the government runs a deficit it most borrow money to

pay it bills.

Open Ended

In brief, explain the difference between Federal budget deficits/surpluses.

Circular Flow Matrix

The circular flow model shows us how
households, businesses, and the government
interact with one another in the economy. Each of
these three parts of the economy are affected by
the actions of the others.

We will discuss this matrix more in the future
but just know that economics has a flow.

Circular Flow Image

Fill in your
chart

Circular Flow Issues

While the circular flow model works well
most of the time, there are things that can
“gunk up” the flow.

What are some things that can cause the circular flow
not to work properly? Do you think Capitalism
enslaves us?

Open Ended

In your own words, explain the Circular Flow Matrix.

Business Cycle

Business cycles are intervals of expansion followed
by recession in economic activity. Typically goes
through 4 major phases.

Expansion - Peak - Contraction - Trough

How does this all work?

Business Cycle