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The students review the economic functions of government, noting that taxes are necessary to pay for government activities. Then they consider how the government can influence behavior through taxation, by taxing sources of pollution to reduce emissions, for example, or by decreasing tax rates to encourage people to spend more. Looking at other examples, the students identify ways in which various taxes may change the behavior of those to whom they apply. They learn that taxes create incentives, and that people's responses to these incentives may have unexpected results.
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Visual 7.1 - Visual 7.4 Lesson 7 Activities
Activity 7.1 - Activity 7.2 Standards in Economics
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