New_FIscal_Policy_power_point

New_FIscal_Policy_power_point - Chapter:13 FISCAL POLICY,...

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FISCAL POLICY, DEFICITS, AND DEBT Chapter:13
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Learning objectives In this chapter students will learn: The purposes, tools, and limitations of fiscal policy. The role of built-in stabilizers in moderating business cycles How the standardized budget reveals the status of U.S. fiscal policy. About the size, composition, and consequences of the U.S. public debt
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Major function of the government stabilize the economy by manipulating the public budget
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Government expenditures (Government purchasers + Transfer payments) · Tax revenues The Federal Budget
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  Federal Government Expenditures: 2009 - $ 3107 billion . ... social security Medicare Medicaid national defense ( 75 %)
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Mandatory spending: $1.89 trillion Discretionary spending: $ 1.21 trillion Mandatory spending: $1.89 trillion $944 billion - Social Security $408 billion - Medicare $224 billion - Medicaid and the State Children's Health Insurance Program (SCHIP) $360 billion - Unemployment/Welfare/Other mandatory spending $260 billion - Interest on National Debt
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Federal Government Tax Revenues 2009 - $ 2.7 Trillion. .... Individual income tax, corporate income tax and social security taxes ( 90%) 2008- Budget deficit: $ 410 billion
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Federal Spending :2009
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Federal Revenue – Fiscal Year 2009
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Budget Deficit : Government expenditures greater than tax revenues 2008 – $ 410 billion 2009 - $ 1,700 billion estimated
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INCOME TAX STRUCTURES Progressive – Tax rate increases as taxable income increases Proportional - the same tax rate is used for al income levels Regressive- Tax rate decreases as a taxable income increases.
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Balanced budget: Government expenditures are equal to tax revenues
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Federal Budget Balance Actual and Projected, Fiscal 1994-2014 Source: Congressional Budget Office $300 200 100 0 -100 -200 -300 -400 -500 Budget Deficit (-) or Surplus, Billions 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Actual Projected (as of March 2008)
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Standardized Budget Balance Percentage of Potential GDP, 2007 Source: Organization for Economic Cooperation and Development Denmark New Zealand Ireland Canada Norway France United States United Kingdom Japan -6 -4 -2 0 2 4 6 Deficits Surpluses
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Cyclical Deficit: Budget deficit resulting from a downturn in economic activity
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Structural Deficit Part of the deficit that would exist if the economy is operating at full employment
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Public debt:2008 Total amount the federal government owes its creditors- $13. 7 trillion
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This note was uploaded on 06/06/2011 for the course ECON 101 taught by Professor Dsliva during the Summer '11 term at Moraine Valley Community College.

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New_FIscal_Policy_power_point - Chapter:13 FISCAL POLICY,...

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