• Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
1,708
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
347
Comments
0
Likes
4

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. The Government and Fiscal Policy
  • 2. Government in the Economy
    • Nothing arouses as much controversy as the role of government in the economy.
    • Government can affect the macroeconomy through two policy channels: fiscal policy and monetary policy.
      • Fiscal policy is the manipulation of government spending and taxation.
      • Monetary policy refers to the behavior of the Federal Reserve regarding the nation’s money supply.
  • 3. The Budget Deficit
    • A government’s budget deficit is the difference between what it spends ( G ) and what it collects in taxes ( T ) in a given period:
    • If G exceeds T , the government must borrow from the public to finance the deficit. It does so by selling Treasury bonds and bills. In this case, a part of household saving ( S ) goes to the government.