STUDY GUIDE FOR STATE END-OF-COURSE EXAM
Goal 1
Magna Carta-signed 1215 –Ideas for British & U.S. Constitution
Mayflower Compact-example of direct democracy
The Virginia House of Burgesses – marked the beginning of self-government in colonial America—example of
representative democracy
English Common Law—based on customs & precedent
Colonists resented the British taxes—because they had no representatives in Parliament, as people living in Great Britain
did, the colonists believed that Parliament had no right to tax them. “no taxation without representation!”
In protest of a British tax on tea—Colonist led by Samuel Adams dressed as Indians, boarded ships with tea and dumped it
all in the harbor—this is known as the Boston Tea Party—in response the British closed the port and passed the Coercive
Acts—called the Intolerable Acts by the colonist—this led to the meeting of the First Continental Congress –delegates sent
document to King George III of England demanding that their rights be restored—King George responded with force April
1775 two battles between British and Colonial soldiers took place in Massachusetts at Lexington & Concord—these
became known as the first battles of the Revolutionary War. May 1775 colonial leaders convened the Second Continental
Congress in Philadelphia
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Thomas Paine wrote a pamphlet that inspired colonists to fight/struggle for freedom—called “Common Sense”
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English philosopher John Locke’s ideas about natural rights—life, liberty, & property and the idea that if
government misuses power people should rebel against it and form a new one in his book Second Treatise of
Government.
Articles of Confederation—1st Constitution –contained only one branch of gov’t
Weaknesses—Lack of Power & Money—no power to collect taxes, no power to regulate trade, no power to enforce its laws
Lack of Central Power—no single leader or group directed gov’t policy –no national court system existed Rules too Rigid –
Congress could not pass laws without approval of 9 states—Articles could not be changed without the agreement of all 13
states
Daniel Shay’s led an uprising in Massachusetts over high state taxes—on a federal arsenal—called Shay’s Rebellion—
showed that the National Government was weak and needed to be made stronger
All states send delegates to meeting to revise the Articles of Confederation except Rhode Island –totally against a stronger
national government. Delegates decide to write a new Constitution instead.
Virginia Plan—proposed 3 branches of government with 2 house legislature with both houses based on population---larger
states would have more votes than small
The New Jersey Plan—3 branches with one house legislature where each state gets one vote –made small states equal to
large
Connecticut Plan/Great Compromise—legislative/Congress have 2 houses a Senate with equal representation & a House of
Representatives based on population –to please both large and small states
Three-Fifths Compromise— every 5 enslaved persons would count as 3 free persons in determining representatives
Federalists—supporters of the new constitution & strong national government
Anti-federalists—opposed the new constitution –felt it gave the national gov’t too much power
Bill of Rights—to provide protection for certain individual liberties—(protection from government abuses)
First Amendment-protects 5 freedoms: religion, speech, press, petition, assembly
Slander—if lies are spoken Libel—if lies are printed---also clear and present danger—you can’t yell “fire” in a crowded
theater
CIVICS –STUDY OF RIGHTS & DUTIES OF CITIZENS
Dictatorship—gov’t controlled by one person or small group of people
Democracy—citizens share in governing and being governed
FUNDAMENTAL PRINCIPLES OF DEMOCRACY—Rule of Law, Limited Government, Consent of the Governed, Individual
Rights, and Representative Government
GOAL 2
PRINCIPLES UNDERLYING THE CONSTITUTION—Popular Sovereignty, Rule of Law, Separation of Powers, Checks and
Balances, Federalism
Baron de Montesquieu—believed the best way to protect the liberty of the people was to clearly separate the legislative,
executive, and judicial functions of the gov’t—called the Separation of Powers
Popular Sovereignty—idea that power lies with the people
Checks and Balances--Legislative Branch/Congress can impeach president, can override veto, can reject appointments,
can refuse to approve treatise, can impeach judges, can reject appointment of judges Executive Branch/President can veto
legislation, can appoint judges
Judicial Branch/Supreme Court can declare acts of legislature unconstitutional, can declare presidential actions
unconstitutional
Federalism—power shared by the national government and the states—dividing power—expressed powers and reserved
powers---In Article VI –Supremacy Clause—National Government “supreme law of the land”
Article I –List Powers of Congress—Expressed/Enumerated Powers and Implied Powers by the “necessary and proper” or
elastic clause (chart on page 84)
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Article II –Executive Branch
Article III –Judicial Branch
Parts of the Constitution—Preamble, Articles I-VII, Amendments
First 10 Amendments = Bill of Rights
Amending the Constitution—chart on page 85
1. proposal –Vote of two-thirds of both house –Ratification—approved by three-fourths of 50 state legislatures
2. proposal—by national convention called at the request of two-thirds of 50 state legislatures –Ratification—
approved by three-fourths of ratifying conventions held in 50 states
1803 Marbury v. Madison—established the Supreme Courts power of Judicial Review –power to say whether any federal,
state, or local law or government action goes against the Constitution –can nullify, or cancel laws or actions
Supreme Court Cases—pages 877-880 plus Leandro v. North Carolina and Regents v. Bakke
Apportionment—chart on pages 140-141
Presidential Election**Electoral College—group of people who are elected by voters of each state—voters of each state are
actually voting for a list of presidential electors pledged to their candidate
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Each state has as many electoral votes as the total number of U.S. senators and representatives---538 total
electors ---“winner take all system”
First Amendment—prohibits Congress from establishing an official religion in the U.S. It protects the freedom of
Americans to practice their faith as they wish
Executive Agency—Office of Management and Budget—prepares the federal budget & monitors spending in hundreds of
government agencies
543-544 Taxes on Income & Profits
Payroll Taxes—one-third of federal revenue Social Security—provides for retired or disabled Medicare –healthcare for
elderly
Excise Taxes—gasoline, tobacco, alcohol, legal betting, and telephone service—only 3.4 cent of every dollar collected
Estate Tax—tax on wealthy & Tax on Gifts make up 1.3 cent of every federal revenue dollar
Forms of Taxation
Proportional tax—same percentage of income from everyone regardless how much they earn
Progressive tax—increases as your income increases –ex. Federal income tax
Regressive tax –(opposite of progressive) percentage you pay goes down as you make more money/income---examples—
social security taxes, gasoline taxes, and sales taxes—
543—Budget Process—President sends proposed budget to Congress (by 1st Mon. in Feb.) Congress passes budget
resolution –totals revenues & spending –divided into two types
Mandatory—does not need annual approval such as social security benefit checks and interest on the National Debt and
Discretionary –must be approved such as Coast Guard, agriculture, space exploration, hwy construction, and defense
Voluntary Compliance ???
GOVERNMENT AGENCIES
FTC—Federal Trade Commission—deals with fraud, deals with problems of false advertising and product claims
EPA—Environmental Protection Agency—sets goals and standards for environmental problems---acid rain
FEMA—Disaster relief ATF-alcohol, tobacco, and firearms Department of Homeland Security
FDA—Food & Drug Administration –drug testing—deals with the purity, effectiveness, and labeling of food, drugs, and
cosmetics
GOAL 3
Levels of Government
North Carolina Constitution –page 875-876
Amending state constitution similar to amending the U.S. constitution
Referendum—a way for citizens to vote on state or local laws
14th Amendment—required every state to grant its citizens “equal protection of the laws” –forbids state governments from
interfering with the “privileges or immunities of citizens of the U.S.” Further, state governments may not take an
individual’s “life, liberty, or property, without due process of law.” The intent of these provisions was to make the Bill of
Rights binding for state governments as well as the federal government.---called the Nationalization of the Bill of Rights
City Governments –check out charts on pages 308 & 309
Eminent domain—the right of government to take private property for public use
Chapter 33 for taxation & revenues for state & local governments
GOAL 4
Political Machines –At times in the past some local party organizations became so powerful that, year after year, their
candidates swept almost every election. Such a strong party organization is called a political machine. One of the most
famous –and notorious—political machines was New York City’s Tammany Hall. This organization ruled New York City in
the late 1800s and early 1900s. Its leader, William Marcy “Boss” Tweed, and his friends grew rich from bribes and
kickbacks given by building contractors seeking to do business with the city. (Movie –Gangs of New York is based on this)
Political Parties –are the only organizations that select and offer candidates for public office through the nomination
process. Party Roles—Campaigning for Candidates, Informing Citizens, Helping Manage Government(supporters/friends get gov’t jobs), often Linking the Different Levels of Government –for example a mayor of a
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large city who is a democrat may know or be linked with a Governor of the state who also happens to be a
democrat, Acting as a Watchdog
Party Platform—a series of statements expressing the party’s principles, beliefs, and positions on election issues
Primary Elections—parties elect candidates at all levels of government through direct primary which voters choose
candidates to represent each party in a general election. Two main forms of direct primaries, closed primary is
an election in which only the declared members of a party are allowed to vote for that party’s primary. Open
primary –in which voters do not need to declare their party preference in order to vote for the party’s nominees.
Caucus—a meeting of political party members to conduct party business (often choose candidates to represent their
party)
Financing A Campaign—Starting in 1971 Congress tried to place some control on campaign financing. The Federal
Election Campaign Finance Act of 1971 (and its amendments in 1974, 1976, and 1979) established the main rules
for campaign finance today. The law required public disclosure of each candidate’s spending, established
federal funding of presidential elections, and tried to limit how much individuals and groups could spend. For
example, the law limited the amount of money that an individual may donate to a presidential candidate. It also
created the Federal Election Commission (FEC)—an independent agency of the executive branch—to administer
all federal election laws and monitor campaign spending. A 2002 bill loosened some of these restrictions while
placing greater restrictions in other areas.
Public Funding—the 1971 law established the Presidential Election Campaign Fund which allows taxpayers, by checking a
box on their federal income tax return, to designate $3 of their annual taxes to go to the fund. In general, majorparty presidential candidates can qualify to get some of this money to campaign in primary elections if they
have raised $100,000 on their own. After the national conventions, the two major-party candidates receive equal
shares of money from the fund, so long as they agree not to accept any other direct contributions.
Private funding—(makes up most campaign funding) –individual citizens, party organizations, and corporations. In
addition, a wide variety of special-interest groups, such as labor unions, the National Rifle Association, and the
American Medical Association donate funds to candidates. Presidential as well as congressional candidates
have found ways to get around the limits of the 1971 law. Two key ways are so-called soft money donations and
contributions made through organizations known as political action committees (PACs). Donations given to
parties and not designated for a particular candidate’s election campaign are called soft money. By law, this
money must be used for general purposes, such as voter registration drives or direct mailings or
advertisements about political issues. Most goes to National TV ads for the parties’ candidates. Soft Money
provides a way for wealthy people & groups to spend as much as they want in support of a party’s candidates,
especially the presidential candidate. During the 2000 election George W. Bush held a fund raising dinner where
individuals and corporations donated $21 million for the party. Clinton/Al Gore raised $26 million at their dinner.
Before the election each had raised more than $200 million in soft money. The 1971 law also led to the growth of
political action committees (PACs) established by corporations, labor unions, and other special-interest groups
designed to support political candidates by contributing money. PACs use funds to support presidential,
congressional, and state and local candidates who favor the PACs position on issues. The 1971 law prohibited
corporations and labor unions from giving directly to campaigns, but they can set up PACs and give unlimited
amounts of soft money to political parties. Today there are more than 4,700 PACs.
Propaganda—certain ideas that may involve misleading messages designed to manipulate people—candidates use
propaganda techniques to try to persuade or influence voters to choose them over another candidate
Grass roots—usually means beginning at the lower or local level to get a movement or ideas started—could be a law that a
group of people want to see passed
Some Americans do not think that any of the candidates represent their feelings on issues, or they think that their vote will
not make a difference—Another reason is Apathy—lack of interest.
Interest Groups—groups of people who share a point of view and unite to promote their viewpoints. By their very nature,
interest groups are biased; that is they support a particular viewpoint. Also called special-interest groups,
because they believe that by pooling their resources—time, money, and skills—they can increase their chances
of influencing decision makers.
Types of Interest Groups—Economic-U.S. Chamber of Commerce, the Tobacco Institute, American Federation of Labor
and Congress of Industrial Organizations (alliance of labor unions) –American Medical Association—represents
doctors Some Groups organize to promote an ethnic group, age group, or gender. NAACP—National
Association for the Advancement of Colored People, National Organization for Women NOW, American
Association of Retired People AARP also groups work for special causes –Sierra Club and the National Wildlife
Federation are concerned with protecting wildlife and nature.
Public Interest Groups –work to benefit all, or at least most, of society. Ex. Common Cause works to promote the common
needs of all citizens.
Lobbyists—are representatives of interest groups who contact lawmakers or other government officials directly to
influence their policy making.
Civil Law—is to settle disputes between a plaintiff and defendant
Criminal Law—involves a crime –an act that breaks a federal or state criminal law and causes harm to people or society in
general—written criminal laws called the penal code
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Juvenile Law—is how government handles juveniles who commit crimes or engage in unwanted or destructive behavior
Duties—are things we must do Obey Laws, Pay Taxes, Defend the Nation, Serve in Court, Attend School Responsibilities—
are things we should do; they are obligations that we fulfill voluntarily
Civil Responsibilities—Be Informed, Speak Up & Vote, Respect Others’ Rights, Respect Diversity, Contribute to the
Common Good—time, effort, & money to help other people & to improve community life for everyone
Community Responsibilities—“Ask not what your country can do for you; ask what you can do for your country” 1961—
John F. Kennedy---G.W. Bush called for a renewed commitment to community service. Donating Time & Money –
Charitable Organizations –National Service Programs like the Peace Corps, Americorps, and the Senior Corps.
Volunteerism—the practice of offering your time and services to others without payment. Ex. Reading to younger children,
giving blood, helping out others in your community—family, teachers, etc…
Charitable Organizations—more than one million registered with the Fed. Gov’t—helping victims of domestic violence or
preserving historic landmarks—Ex. United Way, the Boys & Girls Clubs of America, Big Brothers & Big Sisters
are large national bodies—serving millions
School-Based Programs—students in many schools must volunteer a set number of hours to earn a diploma
National Service Programs—Peace Corps (1961)—to help people in the poorest corners of the world—135 countries
around the world—help advise farmers, teach children, dig wells, help start small businesses & fight the spread
of AIDS
Americorps—help through local & national organizations—volunteers help flood victims, fires, earthquakes, & other
disasters they receive an allowance to live on & money for college
Senior Corps—provide volunteer opportunities to Americans 55 or older—work one on one with children with special
needs Senior Companions—help other seniors meet their daily needs while living in their own homes
Torts—wrongful acts for which an injured party has the right to sue
Mediation—situation in which union & company officials bring in a third party to try to help them reach an agreement
Arbitration—situation in which union & company officials submit the issues they cannot agree on to a third party for a final
decision
Plea bargains—an agreement in which the accused person agrees to plead guilty, but to a lesser charge
GOAL 5
Civil Cases—the plaintiff –the party bringing a lawsuit—claims to have suffered a loss and usually seeks damages, an
award of money from the defendant—the party being sued—argues either that the loss did not occur or that the defendant
is not responsible for it
Jurisdiction—is a court’s authority to hear & decide cases—Article III of the Constitution gives the federal government
jurisdiction over 8 kinds of cases—1. Cases Involving the Constitution, 2. Violations of Federal Laws—i.e. kidnapping, tax
evasion, counterfeiting, 3. Controversies between States, 4. Disputes between Parties from Different States, 5. Suits
Involving the Fed. Gov’t, 6. Cases Involving Foreign Governments and Treaties, 7. Cases Based on Admiralty & Maritime
Laws, 8. Cases Involving U.S. Diplomats
Exclusive jurisdiction—only fed. Courts may hear
Concurrent jurisdiction—the state & federal courts share jurisdiction—crimes that violate both state & fed. Laws—applies
when citizens of different states are involved in a dispute concerning at least $50,000
Federal Courts –United States Court System—1. U.S. District Courts—judges & juries—original jurisdiction 2. U.S. Courts
of Appeals (judges/no jury) Appellate jurisdiction 3. U.S. Supreme Court (justices/no jury) Limited original jurisdiction &
appellate jurisdiction
Steps in Decision Making—1. Written Arguments 2. Oral Arguments 3. Conference 4. Opinion writing 5. Announcement
Reasons for Court Decisions—1. The Law 2. Social Conditions i.e. 1896 Plessy v. Ferguson overturned in 1954 case of
Brown v. Board of Education of Topeka, Kansas 3. Legal Views 4. Personal Beliefs
A Bill becomes a Law—chart on page 160
Infrastructure—a community’s system of roads, bridges, water, and sewers
Referendum—is a way for citizens to vote on state or local laws
Zoning—the building restrictions in an area of a city or town
GOAL 6
Origins of Laws—Code of Hammurabi –from King Hammurabi of Babylonia 1760 b.c.
Ten Commandments from Bible of Hebrews
Roman Laws—Emperor Justinian I ruler of Byzantine/Eastern Roman Empire collected & ordered Roman laws into the
Justinian Code---French Emperor Napoleon Bonaparte updated Justinian Code—called Napoleonic Code—as a result of
lands conquered by Napoleon much of the world now lives by some form of Roman laws
English Law—Common Law—based on court decisions rather than on a legal code—precedents—legal opinions—17th
century Parliament—written statutes—came to dominate the English legal system
Types of Laws—Criminal Laws: plaintiff is always the government—see chart on page 371
Felonies: serious crimes—murder, rape, kidnapping, robbery
Misdemeanors—offenses such as vandalism, stealing inexpensive items, writing bad checks for low amounts
Civil Law—involve disputes between people or groups of people
Franking Privilege: the right of senators and representatives to send job related mail without paying postage
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Lobbying: Lobbyists are representatives of interest groups who contact lawmakers or other government officials directly
to influence their policy making
Sheriff—county’s chief law enforcement officer, FBI—Federal Bureau of Investigation, NCHP—North Carolina Highway
Patrol, SBI—State Bureau of Investigation
Restitution—the giving back of what has been lost or taken away—the act of making good any loss, damage, or injury
Rehabilitation—to correct a person’s behavior, rather than punish the person
Punishment –fines or imprisonment –to pay for an offense against a victim or society—1. provides punishment, 2. help
protect society by keeping dangerous criminals confined, 3. keep other people from committing the same crimes by
serving as warnings to deter others, 4. help prepare lawbreakers for reentering society
Plea Bargains?? Probation—person agrees to obey laws or caregivers during a probationary period—if completes the
charges are removed
GOAL 7
Factors of Production: 1. natural resources, 2. labor, 3. capital, 4. entrepreneurs
Basic Economic Questions: 1. WHAT to produce? 2. HOW to produce? 3. For WHOM to produce?
The fundamental economic problem is the issue of scarcity. Scarcity occurs whenever we do not have enough resources
to produce all of the things we would like to have.
Economic Decisions: Trade-Off—is the alternative you face if you decide to do one thing rather than another Opportunity
Costs—is the cost of the next best use of your time or money when you choose to do one thing rather than another
Assembly Line: increases productivity—by dividing up tasks into specialization for each portion of production
Diminishing Returns: the fact that above a certain level increasing the amount of labor, capital, advertising, or other
expenditures, used to produce a commodity does not cause a proportionate increase in the amount produced
Output versus Input: Productivity goes up whenever more output can be produced with the same amount of inputs in the
same amount of time or when the same output can be produced with less input
Being An Economically Smart Citizen: Keeping Informed, Understanding Incentives, Understanding the Role of
Government
Making Wise Choices: Rational Choice is choosing the alternative that has the greatest value from among comparablequality products.
GOAL 8
Command Economy: (system) the major economic decisions are made by the central government
Market Economy/Capitalism/Free Enterprise System—decisions are made in free markets based on the interaction of
supply & demand—private citizens—not the government—own the factors of production
Traditional Economy: economic decisions are based on custom or habit
Mixed Economy: combines elements of a pure market economy and a command economy
The Role of Government in the Economy
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The production of public goods is one responsibility of government
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Maintaining Competition—Antitrust laws—to control monopoly power and to preserve and promote competition
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Mergers—a combination of two or more companies to form a single business, whenever this threatens
competition the gov’t may step in & prevent it
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Regulating Market Activities—Natural monopolies—i.e. telephone company in a local community---agrees to be
regulated by fed. Gov’t
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Advertising & Product Labels—Federal Trade Commission (FTC) deals with problems of false advertising &
product claims The Food & Drug Administration (FDA) deals with the purity, effectiveness, and labeling of food,
drugs, and cosmetics
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Product Safety—Consumer Product Safety Commission may recall a product off the market to make it safe
The Profit Motive: the driving force that encourages individuals and organizations to improve their material well-being—is
largely responsible for the growth of a free enterprise system based on capitalism
Communism: economic system in which the central government directs all major economic decisions
Socialism: economic system in which government owns some factors of production and distributes the products and
wages
Consumers/Producers—Chart on Page 429
HOW SUPPLY & DEMAND AFFECT PRICES
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People are normally willing to buy less of a product if the price is high & more of it if the price is low---the Law of
Demand says quantity demanded and price move in opposite directions
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As the price rises for a good, the quantity supplied rises. As the price falls, the quantity supplied falls. This is
the Law of Supply—the principle that suppliers will normally offer more for sale at high prices and less at lower
prices
Shortage signals that the price is too low
Surplus signals that the price is too high
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In order to eliminate shortages/surpluses—the price must be raised during shortages and lowered during
surpluses
Horizontal mergers/vertical mergers
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Conglomerate—a large corporation made up of many companies that operate in different and often entirely unrelated
markets
Sole proprietorships: are owned by one person, who keeps the profits and makes all the business decisions. They enjoy
the independence of making all the decisions & they also assume responsibility for covering all of their financial losses.
Partnership: is a business owned by two or more people. –draw up a contract and agree to divide the business profits.
More money is available for funding the business, but partners assume the same risks of unlimited liability that sole
proprietors face.
Corporations: account for about 90 percent of total sales of goods & services in the U.S., although they make up less than
20% of the businesses. –is a business that is licensed, or chartered by the state or federal gov’t. The charter divides the
business into a number of part owners, or stockholders. Stock market is where stock is bought & sold. –avoid unlimited
liability of sole proprietorships & partnerships
Labor union—association of workers organized to improve wages and working conditions
Adam Smith: a Scottish philosopher & economist, provided a philosophy for the capitalist system in his book, The Wealth
of Nations. Smith wrote that individuals left on their own would work for their own self-interest. In doing so, they would be
guided as if by an “invisible hand” to use resources efficiently and thus achieve the maximum good for society.
Saving –is to set aside a portion of income for a period of time so that it can be used later. Dividends are a share of the
corporation’s profits that are distributed to shareholders. A capital gain occurs when stock can be sold for more than it
originally cost to buy. Stocks in publicly traded companies are bought and sold at a stock market, or stock exchange, a
specific location where shares of stock are bought & sold.
Certificates of Deposit: --where customers loan a certain sum to the bank for a specific period of time—in return the bank
pays interest during the time period.
Function of Money: 1. serves as a medium of exchange 2. serves as a store of value 3. serves as a measure of value
Types of money: anything people are will to accept in exchange for goods can serve as money.---Coins are metallic &
currency includes both coins & paper money.
The Federal Reserve System: (Fed) –is the central bank of the U.S. –divided into 12 federal reserve districts –refer to chart
on page 530 One of the Fed’s major responsibilities is to conduct monetary policy. Monetary policy involves controlling
the supply of money and the cost of borrowing money—credit—according to the needs of the economy. The Fed can
change interest rates by changing the money supply. If the Fed wants a lower interest rate, it must expand the money
supply, if the Fed wants to raise the interest rate, it has to contract the money supply. The Fed uses several tools to
manipulate money. First, it can raise or lower the discount rate—the rate the Fed charges member banks for loans.
Second, it may raise or lower the reserve requirement for member banks. This is the amount member banks must keep in
the Federal Reserve Banks. Third, the Fed can change the money supply through open market operations—these are the
purchase or sale of U.S. government bonds and Treasury bills. If the Fed decides that interest rates are too low, the Fed
can sell bonds.
Federal Deposit Insurance Corporation (FDIC)—insures individual accounts in financial institutions for up to $100,000.
GOAL 9
The economy tends to grow over time but it does not grow at a constant rate. Instead it goes through alternating periods of
growth and decline that we call the business cycle.
The Gross Domestic Product (GDP)—is a measure of the ecconomy’s output. Another way of measuring the economy is to
look at employment. The unemployment rate is the percentage of people in the civilian labor force who are not working
but are looking for jobs. ---Tends to increase during recessions and comes down slowly afterward. Another important
indicator of an economy’s performance is inflation. This is a sustained increase in the general level of prices. Inflation
hurts the economy because it reduces the purchasing power of money. To keep track of inflation, the government samples
prices every month for about 400 products commonly used by consumers. The prices of these 400 items make up the
consumer price index (CPI).
Federal Regulatory Agencies:--Chart on Page 504
Consumers earn their income in factor markets—the markets where productive resources are bought and sold. When
these individuals receive their incomes, they spend it in product markets—markets where producers offer goods and
services for sale. Productivity tends to increase when businesses invest in human capital—the sum of the skills, abilities,
and motivation of people. Investments by government & businesses in training, health care, and employee motivation tend
to increase the amount of production that takes place with a given amount of labor.
Specialization: occurs when people, businesses, regions, or countries concentrate on producing the goods and services
that they can produce better than anyone else.
Countries also trade with one another because of comparative advantage. This is the ability of a country to produce a good
at a lower cost than another country can.
The Organization of Petroleum Exporting Countries (OPEC) is an 11-nation cartel of oil-producing countries. It once
controlled 70 percent of the world’s oil-production. And OPEC is powerful—with enough clout to resist American pressure
for a large increase in oil production that would lead to lower consumer prices for oil products.
The two most common kinds of barriers to trade are tariffs and quotas.
A tariff, or customs duty, is a tax on an imported good. Sometimes people want a product so badly that higher prices have
little effect. When this happens, countries can block trade by using quotas, or limits on the amount of foreign goods
imported. Sometimes trade barriers do not work, a bigger problem with trade barriers is that they force consumers to pay
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higher prices. Most policymakers believe that the total costs of trade barriers are higher than the benefits gained. Most
countries now try to reduce trade barriers. They aim to achieve free trade.
North American Free Trade Agreement (NAFTA)—U.S., Canada, & Mexico sign this pact to eliminate trade barriers among
the three countries—Opponents of NAFTA contended that American workers would lose their jobs because U.S. plants
would move to Mexico to take advantage of cheaper wages and less stringent environmental and workers’ rights laws.
NAFTA supporters argued that increased trade would stimulate growth and put more low-cost goods on the market.
The balance of trade is the difference between the value of a nation’s exports and its imports. If a nation’s currency
depreciates, or becomes “weak,” the nation will likely export more goods because its products will become cheaper for
other nations to buy. If a nation’s currency appreciates in value, or becomes “strong,” the amount of its exports will
decline.
Trade deficit—is whenever the value of the products it imports exceeds the value of the products it exports (in a particular
country)
Trade surplus—is whenever the value of its exports exceeds the value of its imports
Types of Taxes—look under goal two—Progressive & Regressive taxes
Spending—Federal Expenditures(what fed gov’t spends money on) –Social Security, Medicare, Income Security, National
Defense, Interest on Debt, from education to highways to natural resources.
Fiscal Policy—is changes in government spending or tax policies. May cut taxes hoping to put more money in pockets of
people –so they can buy more goods & services—which they hope will lead businesses to hire more people. Sometimes
gov’t will increase spending. By buying more goods & services itself, it tries to convince businesses to hire more workers.
Political differences often prevent the effective use of fiscal policy.
Environmental Destruction—A global problem today is destruction of the natural environment. Industries and motor
vehicles have pumped poisonous metals such as mercury and lead into the air and water. Spills from tanker ships have
spread millions of gallons of oil into the oceans and onto beaches, killing fish, sea birds, and food for marine life. Coalburning factories release sulfur dioxide gas into the air, where it mixes with water vapor and later falls to the earth as acid
rain. Sulfur dioxide from factories in the American Midwest may fall as acid rain in Canada, damaging forests and raising
the acid level in hundreds of Canadian lakes, killing many fish. An important way to reduce pollution is through
conservation—limiting the use of polluting resources.
NIMBY—(Not In My Back Yard)—People & government have to make many decisions about the location of various
institutions such as landfills, prisons, alternative schools, rehabilitation centers, etc. Many people fight against having
one or more of these institutions in their neighborhood—this is called NIMBY—because people don’t want these close to
where they live
GOAL 10
Volunteerism –the practice of offering your time and services to others without payment
Tolerance—respecting and accepting others, regardless of their beliefs, practices, or differences
E pluribus unum, meaning “Out of many, one.” This phrase reminds us that the many diverse citizens of the United States
have joined together to create a single, strong nation. For all our differences, we are linked by shared values and
experiences.
Citizens—have certain rights & duties. One very important source of American unity is a common civic and political
heritage based upon the country’s founding documents, such as the Declaration of Independence, the U.S. Constitution of
1787, and the Bill of Rights of 1791. American ideals of individual rights to “life, liberty, and the pursuit of happiness” are
in these founding documents. A Second significant source is a single language, English, which generally is accepted as
the primary means of communication in education, government, and business.
American Volunteers in Action Chart on Page 129 –benefits of volunteering –by banding together to serve the community,
we also serve ourselves—we make our communities better places to live and gain new opportunities to learn, make
friends, and improve teamwork, leadership, and problem-solving skills. It is satisfying to know that you can make a
difference in someone else’s life.
In 2001 President George W. Bush signed a landmark education bill, known as “No Child Left Behind Act.” This law
authorizes $26.5 billion in federal spending on education, but it also increased the rules that schools must follow. For
example, all students in grades three through eight must take a series of state tests in reading and math starting in the
2004-2005 school year. A year later, tests in science will start. With this law, Bush hopes to establish a system of new
accountability measures for schools that do not perform well. Bush claims that “the fundamental principle of this bill is
that every child can learn, and you must show us whether or not every child is learning.” The biggest education issue
facing state governments is how to provide high-quality schooling equally to all students. Currently there is a large
spending gap between wealthy and poor school districts. The gap occurs because many districts depend heavily on
property taxes to fund the schools and property values vary greatly from one district to another.
Poverty—is a major problem in America, and it is extremely difficult to solve. Because of this, a number of different
programs have been devised to help those in need. The most effective ones are those that have built-in incentives that
encourage people to go back to work or to improve their employment situation. (Refer to Education & Income Chart on
page 516) Welfare Programs—Food Stamps & (WIC) Women, Infants, and Children---Income Assistance—(TANF)
Temporary Assistance to Needy Families—Workfare term used to describe programs that require welfare recipients to
exchange some of their labor in exchange for benefits.
Self-determination—free choice of one’s own acts or states without external influence
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Critics of welfare claim that it undermines self-respect among the poor and encourages dependency. Defenders of welfare
assert that it is the only way poorly educated, unemployed female heads of households and their children can avoid
homelessness and hunger.
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