This document discusses chapter 17 from a macroeconomics textbook about government budgets, taxes, and spending. It covers two objectives of fiscal policy, tools the government uses like taxes and spending, how these impact aggregate demand, different types of taxes, deficits and debt, and reasons why government may want to take on debt like for investment.

2. Macroeconomics Winter 2020

3. Chapter 17
The Government Budget
Taxes and Spending

4. Two Objectives

5. Two Objectives
Unemployment

6. Two Objectives
Unemployment
Inflation

8. Monetary

9. Monetary
Central Bank

10. Monetary
Central Bank
Tools

11. Monetary
Central Bank
Tools
Reserve Ratio

12. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate

13. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market

14. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate

15. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate
Aggregate Demand

16. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate
Fiscal
Aggregate Demand

17. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate
Fiscal
Government
Aggregate Demand

18. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate
Fiscal
Government
Tools
Aggregate Demand

19. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate
Fiscal
Government
Tools
Taxes
Aggregate Demand

20. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate
Fiscal
Government
Tools
Taxes
Spending
Aggregate Demand

21. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate
Fiscal
Government
Tools
Taxes
Spending
Aggregate Demand
Aggregate Demand

22. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate
Fiscal
Government
Tools
Taxes
Spending
Aggregate Demand
Aggregate Demand
Aggregate Supply

25. Tax Revenues
Income Taxes
Social Security Taxes
Other

26. Types
Per Head
Flat
Progressive

27. Progressive
The more you earn, the
higher the rate

28. Types
Income
Sales
VAT
Property

29. Deficits and Debt

30. Deficits and Debt
Government
Spending and
Revenue

31. Deficit

32. Deficit
Spending greater
than revenue

33. Balanced Budget

34. Balanced Budget
Spending exactly
equals revenues

35. Surplus

36. Surplus
Revenue greater
than spending

37. Debt

38. Debt
Accumulated deficits

40. Debt

41. Debt
$23 trillion

42. Debt
$23 trillion
$69,700 per person

44. Why would you want
government to go into
debt?

45. Why would you want
government to go into
debt?
Don’t have to pay

46. Why would you want
government to go into
debt?
Don’t have to pay
Future larger economy

47. Debt
Investment

48. Debt
Investment
Only if the return is
higher than the
interest rate