Fiscal Policy Notes

Fiscal Policy Notes - Fiscal Policy Notes The budget...

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Fiscal Policy Notes The budget decisions of the federal government and its consequences Is another name for the Federal Government’s taxation and expenditure decisions/activities Government’s use of taxes and spending to change the conditions of the economy Unique Characteristics of the Government: The Government has the power to tax, which gives it greater control over its revenue The Government has the power to increase or decrease taxes By increasing or decreasing taxes, the government affects the levels of household disposable income Ex. if taxes are increased, disposable income decreases The Government can finance budget deficits by borrowing in the financial market Issues bonds to finance deficits The federal Government and only the federal Government can print money These characteristics set the Government apart from other players in the economy, which are businesses and households What happens when the Government collects more taxes than it spends? Total spending decreases, causing the GDP to decrease
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Fiscal Policy Notes - Fiscal Policy Notes The budget...

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