This preview shows pages 1–3. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: 1-16-08Chapter 4-2-Fiscal policy: government intervenes by using tax. Or courage or discourage spending. (Tax & spending)Budget deficit!!!Spends more than it collects in taxes (income tax is the biggest income for the government)Budget surplusCollects more in taxes than government spendsBudget deficit is normal. When it happens they borrow from otherExpansion does relate with governments spending because people get more incomeRecession hits econ. hard.-National deptAmount that the government owes to people and countries that to cover government deficit. BondWho buys it is like lending money to government.Selling bonds to own people is fine.It is dangerous to sell it to other country. It is like leaking money. (China)-Price levelAverage of pricethat people pay for all the good and services that they buy. (price index: use it to measure price)-Inflation RatePercentage change in the price level.Inflation Rate for 2007~2008 = (price index 2008 price index 2007) / (price...
View Full Document