Chapter 13 2 cass - 1. Fiscal policy is neutral in this...

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Chapter 13 1. Built in stability a. Nondiscretionary policy automatic stabilizers i. Taxes and transfers 2. Economic importance 3. Tax progressivity a. Progressive tax system b. Proportional tax system c. Progressive tax system 4. Discriminory policy a. Monetary policy i. Important role in business cycles b. GDP i. When it falls 1. Social Security 2. Tax revenue decreases a. Govt moves to Deficit ii. If it is equal 1. Govt has surpluses 2. Automatic stability a. Puts stability in but does not promise it 3. Fiscal Policy a. Standardized budget is
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i. Full employment budget b. Cyclical deficit c. Recent U.S. fiscal policy d. Budget deficits and projections e. Social security considerations i. Paid from the receipt you have ii. Uses the reserve fund in budget f. Govt Expenses and Tax Revenues i. If it goes down GDP ii. Government budget does not go down in one year
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Unformatted text preview: 1. Fiscal policy is neutral in this situation iii. Taxes are used for the fallowing year g. Problems i. Problems of timing 1. Recongnition lag a. Takes 3-4 months 2. Admin lag 3. Operation lage ii. Political considerations 5. Debt and GDP a. Substantive issues i. Income distribution ii. Incentives iii. Foreign-owned public debt b. Crowding-out effect revisited i. Burden on future generations ii. Public investments as an offset 6. Leading indicators of Decrease of GDP a. Average workweek i. vacations b. Initial claims for unemployment insurance c. New orders for consumer goods d. Vendor performance e. New orders for capital goods f. Building permits for houses g. Stock prices h. Money Supply i. Interst-rate spread j. Consumer expectations...
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Chapter 13 2 cass - 1. Fiscal policy is neutral in this...

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