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Gale Pooley
Gale Pooley

Macro 16

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Macroeconomics
Opening Prayer
Quiz Master
Quiz Name four ways government can get money?
Chapter 17 The Government Budget Taxes and Spending
Two Objectives Unemployment Inflation
Monetary Central Bank Tools Reserve Ratio Discount Rate Open Market Excess Reserve Rate Fiscal Government Tools Taxes Spending Aggregate Demand Aggregate Demand Aggregate Supply
Tax Revenues Income Taxes Social Security Taxes Other
Types Per Head Flat Progressive
Corporate Tax Rate 21% Flat Rate
Progressive The more you earn, the higher the rate
Types Income Sales VAT Property Excise
De fi cits and Debt Government Spending and Revenue
De fi cit Spending greater than revenue
Balanced Budget Spending exactly equals revenues
Surplus Revenue greater than spending
Debt Accumulated deficits
Debt $31 trillion $93,000 per person
Why would you want government to go into debt? Don’t have to pay Future larger economy
Debt Investment Only if the return is higher than the interest rate
Chapter 18 Fiscal Policy
P4 Price Level Real GDP orY Fiscal Policy and Negative Supply Shock 18 Long Run Aggregate Supply Short Run Aggregate Supply 19 P1 Aggregate Demand 17 P2 P3 In fl ation and Recession Stag fl ation
P2 Price Level Real GDP orY Increase Aggregate Demand Lower Taxes and/or Increase Spending 18 Long Run Aggregate Supply Short Run Aggregate Supply 19 P1 Aggregate Demand 17 Unemployment
P3 Price Level Real GDP orY Decrease Aggregate Demand Raise Taxes and/or Decrease Spending 18 Long Run Aggregate Supply Short Run Aggregate Supply 19 P1 Aggregate Demand 17 In fl ation
Where does government get money? Crowding Out
More Taxes Cancel No effect
More Borrowing Crowding Out Increase interest rates
Lower Taxes People may just save more and not spend
More Spending Now get free stuff. No new spending
Get a free iPhone But your taxes will go up to pay for it No change in total spending
Where does government get the money?
GDP = C + I + G + X - M
If there are inactive capitals Output will increase If all capitals are active Prices will increase

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Macro 16.pdf