Finances!!!

1. Finances!!! Mikaela, Nissrin, Lizzy, and Akila

2. History 1200 B.C.: Cowrie Shells The most widely and longest used currency in history (even in 1950's Africa). 500 B.C.: Modern Coinage Lydia began with lumps of silver (e.g. shekels) stamped to mark authenticity. Hellenization spread use. 800 - 900: The Nose "To pay through the nose" - Danes in Ireland - slit the noses of those remiss in Danish poll tax. Middle Ages - Mediterranean trade necessitated practice of Bill of Exchange - early form of credit as well as money.

3. 1800's - German Jewish immigrants founded the first prominent investment banks (excluded from commercial banking) in America. - Goldman Sachs, Lehman Brothers, and Kuhn Loeb. - Through investment made industrial expansion possible. 1816: The Gold Standard - Banknotes officially tied to a standard. 1930: End of the Gold Standard - The safety of banknotes threatened, and modern complex regulations began. - International credit lines, trade, and inflation used to calculate comparisons.

4. Taxes • The government is always looking to maximize tax revenue. A low tax rate will yield little revenue, and too high of a rate will cause a reduction in quantity so little or no revenue will be generated. • In 1978, Arthur Laffer, explained that large tax cuts would spur so much economic activity that they would increase tax revenue.

5. Taxes cont. Tr(t)=tqe(0)-at2 *tqe(0) is the product of the tax rate times the quantity that would be sold if the tax rate were zero. Tr(0)=0 can be assumed because it makes sense that a tax rate of zero will yield no tax revenue. Tax revenue will also be zero if the tax rate is so high that nothing is sold. t0 tz

6. Taxes cont. • To find the maximum tax rate (t0), set the first derivative of the Laffer equation to zero. t0= qe(0)-2at • We can then see that t= qe(0) = tz 2a 2 • The revenue maximizing tax rate is half the rate yielding zero tax revenue.