Bài giảng MicroEconomics - Chapter 04 The U.S. Economy: Private and Public Sectors

The U.S. Economy: Private and Public SectorsChapter 4McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter ObjectivesU.S. household and business factsThe corporate form of business organizationPrinciple agent problemThe economic role of government Government spending and sources of revenue4-2Household Income Functional distribution of incomeTypes of incomeWage, rent, interest, profitPersonal distribution of incomeDivision among households by quintile4-3Functional Distribution of Income 2007Wages & SalariesRentsInterestProprietor’sIncomeCorporateProfitsIncome By Function PerformedNational Income Received (Percent)0 10 20 30 40 50 60 7071%1%5%9%14%Source: Bureau of Economic Analysis4-4Personal Distribution of Income 2006Lowest20%Second20%Middle20%Fourth20%Highest20%Income Group (Households)Personal Income Received (Percent)0 10 20 30 40 50 603.4%8.6%14.5%22.9%50.5%Source: Bureau of the Census4-5Households as SpendersUses of household income?Personal taxes (13%)Personal saving (1%)Personal consumption (86%)Durables (11%)Nondurables (29%)Services (60%)4-6The Business PopulationPlantFirmIndustryMultiplant firmsVertically integratedConglomerates4-7Domestic Output Percentage of FirmsPercentage of SalesSole ProprietorshipsPartnershipsCorporationsSole ProprietorshipsPartnershipsCorporations72%8%20%5%11%84%Source: U. S. Census Bureau Sole proprietorship Partnership Corporation4-8Advantages of CorporationsMethods of financeStocksBondsLimited liabilityHiring of specialistsUnlimited lifetime4-9Principal-Agent ProblemPotential disadvantage of corporationsStockholders are principalsExecutives are agentsConflict of interest?4-10The Public SectorFederal, state, and local governmentRole of the government in the economy?4-11Government’s RoleProvide the legal structureSet the laws we live byMaintain competitionMonopoly and antitrust lawsRedistribute incomeTransfer paymentsMarket interventionTaxation4-12Government’s RoleReallocating resourcesMarket failureNegative externalityPositive externalityPublic goods4-13Correcting for ExternalitiesNegative externalitiesLegislationSpecific taxesPositive externalitiesSubsidiesGovernment provision of goods 4-14Types of GoodsPrivate goodsRival and excludablePublic goodsNonrivalNonexcludableFree-rider problemQuasi-public goods The reallocation process4-15Government’s RolePromoting stabilityUnemploymentInflationA qualificationPoliticsToo much or too little regulationInefficiency 4-16The Circular Flow RevisitedResourceMarketProductMarketBusinessesHouseholdsCostsMoney IncomeInput FactorsResourcesGoods & ServicesRevenueGoods & ServicesConsumptionGovernmentGoods & ServicesGoods & ServicesNet TaxesNet TaxesExpendituresExpendituresGoods & ServicesResources4-17Government FinanceGovernment purchasesGovernment transfers35 30 25 20 15 10 5 0Percentage of U.S. Output19602007GovernmentPurchasesGovernmentTransferPayments22%5%19%13%27%32%4-18Government RevenueSwedenDenmarkFinlandFranceItalyGermanyUnited KingdomCanadaAustraliaUnited StatesJapanSouth Korea10 20 30 40 50 Source: Organization for Economic Cooperation and Development585551514643424035343332Total Tax Revenue, Approximate Percentage of GDP, 20074-19Federal Expenditures 0 10 20 30 40 50Pensions &Income SecurityNationalDefenseHealthInterest on thePublic DebtSource: U. S. Office of Management and Budget34%21%24%9%Percentage of total expenditure ($2,731 billion), 20074-20Federal Tax Revenues 0 10 20 30 40 50PersonalIncome TaxPayrollTaxesCorporateIncome TaxesExciseTaxesSource: U. S. Office of Management and Budget45%34%3%4%AllOther14%Sources of total tax revenue ($2,568 billion), 20074-21Personal Income TaxProgressive tax ratesBrackets of incomeMarginal tax rateAverage tax rate4-22State FinancesPrimary RevenuesSales & Excise Taxes (47%)Personal Income Taxes (35%)Corporate Income Taxes & License Fees (18%)4-23State FinancesPrimary ExpendituresEducation (36%)Public Welfare (28%)Health & Hospitals (7%)Highways (7%)Public Safety (4%)Other (18%)4-24Local FinancesPrimary RevenuesProperty Taxes 73%Sales & Excise Taxes 17%Primary ExpendituresEducation 44%Welfare, Health & Hospitals 12%Public Safety 11%Housing, Parks, & Sewers 8%Streets & Highways 5%4-25Financing Social SecurityDemographic changesLong-run shortfall in fundingPay-as-you-go planTrust fund withdrawalsTrust fund exhausted in 2041Benefit reductions? Tax revenue increases?4-26Financing Social SecurityPossible solutionsStock & bond investmentsPayroll tax increasesIndividually directed accounts Privately owned and managed accounts Consensus difficult4-27Key Terms functional distribution of incomepersonal distribution of incomedurable goodsnondurable goodsservicesplantfirmindustrysole proprietorshippartnershipcorporationstockbondlimited liabilityprincipal-agent problemmonopolyexternalitynegative externalitiespositive externalitiespublic goodsfree-rider problemquasi-public goodsgovernment purchasestransfer paymentspersonal income taxmarginal tax rateaverage tax ratepayroll taxescorporate income taxsales and excise taxesproperty taxes4-28Next Chapter PreviewThe United States in the Global Economy4-29