ECN 302-602 (6), The Government Budget

ECN 302-602 (6), The Government Budget - Chapter 5 -The...

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Chapter 5 -- The Federal Budget Budget = Tax Revenues - Government Expenditure (over a given period) Budget = Tax Revenues - (Government purchases of goods and services + Transfer Payments + Interest on the National Debt)
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Budget Definitions Budget < 0 -- Budget Deficit Budget > 0 -- Budget Surplus Budget = 0 -- Balanced Budget Realistic Goal -- Balanced Budget when Y = Y N .
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The Federal Budget: 2001 (Billions of Dollars) Tax Revenues = $1991.0 Government Expenditure = $1863.9 Budget = $127.1 Source: Economic Indicators , April 2002
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Breakdown of Tax Revenues Personal Income Taxes = $1010.1 Corporate Profits Taxes = $186.5 Indirect Business Taxes = $110.9 Contributions for Social Insurance = $720.6
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Breakdown of Government Expenditure Consumption Expenditures (G) = $514.1 Transfer Payments = $831.7 Grants-in-aid to State and Local Governments = $274.2 Net Interest Paid = $236.4 Net Subsidies of Gov’t Enterprises = $52.4
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The Budget: In Our Notation Recall variable definitions: -- T = net taxes = tax revenues - (transfer payments + interest on the national debt) -- G = government purchases of goods and services
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The Budget and The Size of the Deficit Budget = T - G Size of Deficit = G - T
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The National Debt -- The total accumulated stock of debt owed by the government to its lenders. Expanded by deficits, reduced by
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ECN 302-602 (6), The Government Budget - Chapter 5 -The...

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