fiscal - Fiscal Policy Sandeep Bhaskar Temple University...

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Unformatted text preview: Fiscal Policy Sandeep Bhaskar Temple University Sandeep Bhaskar (Temple University) Fiscal Policy 1 / 22 Outline 1 Introduction 2 Fiscal Policy & Employment 3 Fiscal Policy & Investment 4 Fiscal Policy & Business Cycles Sandeep Bhaskar (Temple University) Fiscal Policy 2 / 22 Introduction Fiscal Policy Policy that deals with the financial matters of the public treasury. It involves both income and expenditure side of the story. We will make this more precise in a bit. Sandeep Bhaskar (Temple University) Fiscal Policy 3 / 22 Introduction Federal Budget Annual statement of expenditures and tax revenues of the federal government along with the laws and regulations that approve and support those expenditures and taxes. It has two main goals: To finance government activities: where the money will come from and where will it go. To achieve macroeconomic goals. It is this aspect of the budget we are primarily concerned with. Sandeep Bhaskar (Temple University) Fiscal Policy 4 / 22 Introduction Fiscal Policy The use of the federal budget and other instruments to achieve macroeconomic goals is called fiscal policy . There are various ways in which government action influences the state of the economy, and we saw one in the last chapter on expenditure multipliers. In this chapter we will be concerned with two main sides of this story: Impact on unemployment and GDP. Impact on savings and investment. Sandeep Bhaskar (Temple University) Fiscal Policy 5 / 22 Introduction Government’s Sources of Income The government earns its income through taxes. Personal Income Tax is the single largest component of this income. Social Security Tax is the second largest source. Other sources include Corporate Income Taxes, and Indirect Taxes. Sandeep Bhaskar (Temple University) Fiscal Policy 6 / 22 Introduction Government Expenditure So far we have only been concerned with the expenditure of the government in the goods markets. But, the government spends most of its money somewhere else: Transfer Payments, like Social Security, Medicare, Medicaid, and Unemployment Benefits, consume a bulk of government income....
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This note was uploaded on 05/04/2011 for the course ECON 1101 taught by Professor Rappoport during the Fall '08 term at Temple.

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fiscal - Fiscal Policy Sandeep Bhaskar Temple University...

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